2015 Budget Update &

Year-End Tax Strategies

Overview

2015

Budget

Tax

Strategies

Q & A

2015 Budget - Small Business

• Accelerated depreciation for assets up to $20,000.

• Start Ups, immediate deduction for professional expenses, to establish a new business.

• From 1 July 2015, Company Tax rate to reduce from 30% to 28.5%.

• Unincorporated entities will receive a 5% discount on tax, up to a maximum of $1,000.

• From 1 July 2016, taxpayers will receive relief

from Capital Gains Tax when changes are made

to it’s structure.

2015 Budget - Other Business

• From 1 July 2017, foreign companies will pay GST on digital

products. “Netflix tax”.

• Tax integrity measures will be imposed for multi-nationals that

are shifting profits from Australia to low-tax countries.

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2015 Budget - Superannuation

• There were no changes to superannuation in the 2015

Budget.

• In response to the Tax White Paper and Murray Financial

System Inquiry changes to superannuation are expected, in

the future.

• Under review…

− Borrowing in Self-Managed Superannuation Funds.

− Limitations on tax-free pensions for wealthy retirees.

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2015 Budget - Individuals

Individual’s Tax Rates – Residents

2015/16 & 2016/17 Threshold Marginal Tax Rate

1st rate $18,200 19.0%

2nd rate $37,001 32.5%

3rd rate $80,001 37.0%

4th rate $180,001 47.0%

2015 Budget - Aged Pension

Social Security Assets Test – Current

20 Mar 2015 to

31 Dec 2016

Home Owners Non-Home

Owners

Full pension: single $202,000 $348,000

Full pension: couple $286,000 $433,000

No pension: single $775,500 $922,000

No pension: couple $1,151,500 $1,298,000

* Pension phased at $1.50 per $1,000 over the thresholds.

2015 Budget - Aged Pension

Social Security Assets Test – Proposed

From Jan 2017 Home Owners Non-Home

Owners

Full pension: single $250,000 $450,000

Full pension: couple $375,000 $575,000

No pension: single $547,000 $747,000

No pension: couple $823,000 $1,023,000

* Pension phased at $3.00 per $1,000 over the thresholds.

2015 Budget - Child Care

Annual Family

Income

% of Child Care

Fees Subsidised

Up to $65,000 85%

Up to $170,000 50%

$185,000 and above Capped at $10,000 per child, per year

• Applicable from 1 July 2017.

• Single child care subsidy will be introduced to replace existing three subsidies.

• New subsidy will be ‘means’ tested and based on an activity test/hours worked.

2015 Budget - Child Care

Hours Worked

Per Fortnight

Hours of Child Care

Subsidised

8 to 16 36

17 to 48 72

49 or more 100

Work Activity Test

Year-End Tax Strategies

• Accelerated asset depreciation up to $20,000.

• Superannuation contributions.

• Timing strategies...

− Prepayment of business expenditure.

− Deferral of customer invoicing.

− Delay sale of profitable assets.

− Bring forward assets with losses.

Year-End Tax Strategies

• Re-value trading stock.

− Lower stock >>> Lower taxable income = Less tax.

• Write off bad debts.

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Structural Tax Changes

• A growing business may require a change in it’s structure to manage tax liabilities.

• Options…

− Discretionary trusts

− Private companies

− Self-Managed Superannuation Funds for investment assets, including business property.

• From 1 July 2016, small businesses can change their structure without triggering Capital Gains Tax.

• Possible to restructure without paying capital gains tax but stamp duty will apply to value of assets transferred.

Summary

• The 2015 Budget changes benefit small business owners.

• Take advantage of tax savings before 30 June 2015.

• Consider if your business structure is still appropriate?

• Consider the benefits of having a Self-Managed

Superannuation Fund?

Questions