Posted by SP Solutions
As a new financial year draws near, we thought you’d benefit from a recap on how the recent Budget will impact on you and your small business
On May 8th 2012, Treasurer Wayne Swan handed down a highly publicised surplus budget. Whilst there was nothing in the budget that was extraordinarily different toprevious budgets, there are still key changes that will most certainly have an impact on most small businesses and individuals.
Though the changes impact individuals more than small businesses (particularly changes to Family Tax Benefits) the purpose of this article is to note some of the more important changes so that you can adjust your business procedures as needed.
The promised drop in corporate tax rate from 30% to 29% has been scrapped. This was to apply from 1st July 2012 for small business and 1st July 2013 for medium/large business. We will wait and see whether it will be reintroduced in another years time.
The ability for companies to offset losses against profits made in earlier income years, which could potentially be a planning tool for those companies who are subject to fluctuating trading conditions (eg retail/manufacturing), or whose revenues are unevenly spread (eg property developers / investors).
100% immediate write-off for business assets purchased from 1st July 2012. This will reduce the profit for the business for the 2012/13 year and provide an incentive for business to invest in their businesses and boost the surrounding economy.
Access to a single accelerated depreciation pool for all business assets costing more than $6,500, purchased from 1st July 2012 forward.
A tightening of the rules surrounding employers who pay employees a Living away from Home Allowance, particularly with the imposition of rules surrounding whether that person actually maintains a home that they are living away from. Additionally, it imposes a maximum of 12 months for a specific work location
Tax-free threshold tripled to $18,500, meaning that there will be many employees (particularly part time or casual staff earning less than around $300 per week) that will not require PAYG Withholding to be deducted from their pay. This is likely to result in lower PAYG payments to the ATO on activity statements, but will increase immediate amount paid on each pay run to employees (Note that this could have a cash-flow impact on your business).
Non-residents will have an increased PAYG Withholding rate.
The tricky stuff
- There will be changes to the treatment of bad debts between related parties
- Small Business CGT Concessions will undergo changes concerning provisions surrounding bankrupt individuals, companies in liquidation, security providers and absolutely entitled beneficiaries
- Increased scrutiny surrounding the ATO’s GST Compliance program (at SP Solutions we have already noticed a large increase in GST audit activity)
Many of the above changes are still subject to working party finalisation, and as such the finer details are not yet available. Employers who have employees with Living Away from Home Allowances should ensure that all documentation and individual circumstances have been reviewed to ensure compliance with the new rules.
If you believe that your business will be adversely affected, or you have business, tax, or wealth management queries of any kind, speak to your Accountant at SP Solutions who will gladly assist you in maximising positive impact and mitigating disruptions for you and your small business.