Announcements

2011 Budget Highlights

The Treasurer has handed down the 2011-12 Federal Budget. The following are highlights that may impact your business:

Motor Vehicle Fringe Benefits - The Government will reform the current statutory formula method for determining the taxable value of car fringe benefits by replacing the current statutory rates with a single rate of 20%, regardless of the distance travelled.

Immediate write offs for Small Business Motor Vehicles - An immediate deduction of up to $5,000 will be available to small businesses for motor vehicles acquired from the 2012-13 income year. The remainder of the motor vehicle value will be pooled in the general small business pool and will be depreciated at 15% in the year of acquisition and 30% for subsequent years.

Entrepreneurs Tax Offset - The Entrepreneurs Tax Offset will be abolished with effect from the 2012-13 year.

Annual Reporting of Payments in the Building & Construction Industry - From 1 July 2012, certain businesses will be required to report annually on payments made to contractors in the building and construction industry. Increased funding will be provided to the ATO to undertake data matching, reviews of contractor's tax liabiities and targeted audits.

Director Liability - From 1 July 2011, tax laws will be modified to make company directors personally liable for unpaid employee superannuation.

For further information concerning the changes, please click here.

2010 Budget Highlights

The following are three of the key changes to tax and superannuation:

A reduction in company tax rate to 28% - small businesses will benefit from 2012-13, but it will be phased in for other companies (29% for 2013-14 and 28% from 2014-15);

Small businesses will be able to immediately write-off assets valued at under $5,000 (currently $1,000) and all other assets (except buildings) will be written off in a single depreciation pool at a rate of 30% - this will apply from 1 July 2012;

Superannuation Guarantee rate will rise to 12% by 2019-20 (to be phased in from 1 July 2013).

Small Business Tax Break Boost

Following the 2009 budget release, small businesses are now be able to claim a bonus tax deduction of 50% (up from 30% previously notified in the Economic Stimulus Package) of the cost of eligible assets.

The following is a general explanation of this feature of the Government’s Stimulus Package:

• To boost business investment, the Government will provide a temporary tax break to small and other businesses

• Small businesses will be able to access the tax break for new eligible assets costing $1,000 or more. For large businesses, the asset threshold is $10,000.

• For small businesses (under $2 million turnover) the tax break provides an additional tax deduction for new assets acquired from 13 December 2008 to 31 December 2009, where the asset is also installed before 31 December 2010. The deduction will be equal to 50% of the asset's cost.

• Large businesses (over $2 million turnover) acquiring new assets between 13 December 2008 and 30 June 2009 installed ready for use before 30 June 2010, are eligible for a deduction of 30% of the asset's cost.

• Large businesses (over $2 million turnover) acquiring new assets between 1 July 2009 and 31 December 2009 installed ready for use before 31 December 2010, are eligible for a deduction of 10% of the asset's cost.

Example:

A large landscaping business entered into a binding contract to acquire a new backhoe on 20 May 2009 at an all inclusive cost of $60,000. The backhoe is delivered and ready for use on 20 June 2009.

The business will be entitled to claim the 30% deduction of $18,000 in addition to the standard depreciation claim.

If the business had delayed this investment until 30 August 2009 - and had the equipment installed ready for use before the end of December 2010, the 10 % rate would apply. It would be able to claim a deduction of $6,000.

For further information concerning the above feature of the Government’s Stimulus Package, please click here.

Phone a Financial Dynamics Client Manager today on 44 212345 to discuss how your business can benefit from the tax breaks.

2008 Budget - Payroll Tax Overview

Payroll tax threshold indexation

The Government will introduce annual indexation of the payroll tax threshold from 1 July 2008 and NSW will be the only state to annually index the payroll tax threshold.

Indexation is be based on the movement in the Sydney CPI over the year to the previous March quarter.

The threshold applying from 1 July 2008 will be $623,000, up from $600,000.

This measure will provide tax relief to businesses by allowing for the impact of inflation on their wages bill.

Payroll tax rate reduction

The Government will reduce the payroll tax rate from 6% to 5.5% in three stages, starting from 1 January 2009.

The first reduction from 6% to 5.75% will occur from 1 January 2009, followed by a reduction to 5.65% from 1 January 2010, and a further reduction to 5.5% from 1 January 2011.