The recent Federal Budget proposes a raft of business and taxation changes that, if passed by Parliament, will affect most businesses advised by Charman Partners.  Whilst the proposed amendments to existing superannuation arrangements have taken most of the spotlight there are a number of other proposals that deserve mention and further discussion.

The headline taxation announcement related to a progressive reduction in the corporate tax rate from the current level of 27.5% to 25% in the financial year 2026-27.  It is interesting to note that this reduction is heavily loaded towards the later years with the current rate of 27.5% remaining constant until 2024.  In line with this reduction of corporate tax rate is an increase in the tax discount for unincorporated small businesses rising from 5% to 16% in 2026-27.  Apart from the first year increase from 1 July 2016 to 8% the increase in this discount once again heavily leans towards the latter years and the current cap of $1,000 per individual will remain.

It is proposed to increase the small business turnover threshold for accessibility to a range of tax concessions including:

• The lower corporate tax rate
• Simplified depreciation
• Simplified trading stock
• Option of accounting for GST on a cash basis from $2M to $10M from 1 July 2016.

In a much publicised and debated move the Federal Government will be seeking to apply GST on all imported consumer goods from 1 July 2017.  Currently goods with a value of less than $1,000 are exempt from GST when imported.  It will be interesting to see how successful the Australian Government are in enforcing these arrangements as it is envisaged that foreign businesses exporting goods to Australia will be required to register for and remit GST on their sales.

In a move welcomed by the majority of accountants but yet to have the finer details confirmed is a simplification of the Division 7A Rules relating to debit loan accounts within Companies. We will be watching with interest to see what the final details unveiled are.

In another much publicised move the Government is seeking to implement the so called “Google” tax or diverted profits tax on large multi-national companies suspected of moving profits offshore.

Finally there are minor amendments to personal income tax levels for medium income earners where the personal income tax threshold was increased from $80,000 to $87,000 from 1 July 2016 where after the 32.5% personal rate will apply to income.

Contributed by: Mark Barson