2015 Federal Budget Report

The Federal Treasurer, Mr Joe Hockey, handed down his second budget at 7.30pm (AEST) on Tuesday 12 May 2015.

In general, the budget is aimed at supporting small business and growing jobs ($5.5 billion including $5 billion of tax relief), supporting families ($4.4 billion funding boost), ensuring fairness of tax and benefits, national security and progressing budget repair in a measured way.

The full Budget papers are available at http://www.budget.gov.au/index.htm and the video can be watched athttps://www.youtube.com/watch?feature=player_embedded&v=g92lL1haUk8

Overview of the Budget

Small Business (Aggregated Annual Turnover less than $2 million)

• Small companies will have a 1.5% tax cut (from 30% to 28.5%) from 2015/2016 tax year.
• An unincorporated small business (ie: sole trader, partnership, trust) will receive a 5% tax discount on income earned from business activities from 1 July 2015. This discount is capped at $1,000 per individual for each income year and delivered as a tax offset.
• Immediate tax deductions for assets purchased and ready to use up to $20,000 from 12/5/2015 to 30 June 2017 (simplified depreciation rule applied).
• New start-ups will be able to claim an immediate deduction for professional expenses associated with the start of the business from the 2015/2016 year.
• From 1 April 2016, FBT exemptions  will apply to work- related portable electronic devices (ie: laptop, mobile phone etc)
• Primary producers will be able to claim accelerated depreciation for water facilities, fodder storage and fencing from 1 July 2016.

Individual and families

• Changes to work related car expenses in 2015/16
  • 12% original method and 1/3 actual expense method will be abolished
  • Flat set rate of 66c per km for cent/ km method
  • Log book method remains the same

• Working holiday maker will be treated as non-residents and taxed at 32.5% from 1 July 2016
• Medicare levy for low-income threshold changes from 1 July 2014
  • Single- $20,896 ($20,542 for 2013/2014)
  • Families- $35,261 and additional dependant will be an additional $3,238
  • Seniors and pensioner- $33,044 ($32,279 for 2013/2014)
• No zone offset for fly in fly out employees

Family Package

• Child care system reform from 1 July 2017
  • Annual household income up to $60,000 will be eligible for a subsidy of 85% of the actual cost paid, up to an hourly fee cap
  • Annual household income of $165,000 will be eligible for a subsidy of 50%
  • Annual household income of $180,000 and above, the child care subsidy will be capped at $10,000 per child per year
• From 1 July 2016, the existing parental leave pay (PLP) scheme, in addition to any employer- provided parental leave entitlement, will be removed.
  The government will ensure that all primary carers would have access to parental leave payments that are at least equal to the maximum PLP benefits (currently 18 weeks at national min wages)
• Family Tax Benefits (FTB) Part A large family supplement will cease from 1 July 2016
• From 1 Jan 2016, families will only be able to receive Family Tax Benefits (FTB) Part A for six weeks in a 12- month period while they are overseas.

Superannuation

• Early access to superannuation: people with a terminal medical condition, effective  from 1 July 2015, can gain unrestricted tax- free access to their superannuation fund (must have two medical practitioner (including a specialist) certify that they are likely to die within one year).

Others

• Reversed charge rule for going concern and farmland sales mechanism will not proceed (remains at GST- free).
• GST compliance: Government will continue to provide funding of $265.5m over the next three years from 2016/2017 to promote the GST compliance.
• New multinational anti- avoidance rule to be introduced.