June 2016

2016 Federal Budget Highlights  

Treasurer Scott Morrison’s 2016/17 Federal Budget delivers a budget deficit of $39.9 billion which is down from $41 billion in 2014/15. The budget provides benefits for businesses both big and small, plus there are significant changes to the superannuation sector that we will explore in this newsletter.

Personal Taxation

The government has announced a change to personal income tax rates to avoid ‘bracket creep’ where inflation pushes people’s salaries into higher income tax brackets without an increase in their spending power.
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Reductions In Corporate Tax Rate

As part of its 10 Year Enterprise Tax Plan, the Government announced a program to cut the company tax rate to 25% over the next 10 years.

Increasing The Small Business Income Tax Offset

From 1 July 2016, the government will increase the current 5% tax discount (referred to as the SBITO) to 8%.

Medicare Levy Low Income Thresholds For 2015/16

For 2015/16, the Medicare Levy low income thresholds will be as follows.

Access To Small Business Tax Concessions

As a boost for small businesses, the Government will extend access to a number of small business tax concessions by increasing the annual turnover eligibility threshold from $2m to $10m. These measures will apply from July 1, 2016 and they expand the number of small business entities able to access the concessions.

Superannuation Changes

By far the biggest area of concern in this Budget is around superannuation.

With Australians working through a debt cycle of HECS repayments, mortgages and costs associated with their children’s education, it’s often not until their 50s that people can afford to ramp up their super contributions.

Applying GST To Low Value Imported Goods

From July 1, 2017, GST will be extended to low value goods imported by consumers. The intent of this measure is to ensure that low value goods imported by consumers face the same tax regime as goods sourced domestically.

Amendments To Division 7A

The government has announced a range of changes (from July 1, 2018) to simplify the Division 7A rules that prevent private companies from making tax-free distributions of profits to shareholders.

Youth Employment Package - Bonuses For Hiring Young People & Interns

As part of the Federal Government’s Youth Employment Package, small and medium enterprises may be eligible for cash bonuses if they offer internships or hire young job seekers. The package is aimed at getting 120,000 vulnerable people under the age of 25 into work.

Claiming Work Related Travel Expenses

In last year’s (2015/16) Federal Budget the Government announced substantial changes to the way you can claim tax deductions for the business use of a motor vehicle. There were four methods for calculating work related expense claims made for the 2014/15 tax year.

SuperStream Deadline - 30th June

SuperStream is a government reform designed to improve the efficiency of the superannuation system. All employers, irrespective of the number of employees you have, must be compliant with SuperStream legislation by the 30th June 2016.

What Are The Acres Of Diamonds In Your Business?

Here’s a story with a message for all business owners titled, Acres of Diamonds.

The story is based on the true story of an African farmer in the late 1800’s who heard tales about other farmers who had made millions by discovering diamond mines. Diamonds were already discovered in abundance on the African continent and the gems were attracting huge prices which inspired the toiling farmer to sell his farm and go prospecting for diamonds.

Starting A Business - Do The Numbers Stack Up?

You need more than just a great idea, loads of enthusiasm and technical skill to create a viable business. While each of these ingredients certainly help, they don’t guarantee success in business.