The legislation to repeal the Minerals Resource Rent Tax (Carbon Tax) passed the Senate yesterday (2 September 2014) along with a series of concessions funded by the mining tax.
Below summarises the main changes :
- The schoolkids bonus will stay until 31 December 2016 but an additional means test (adjustable taxable income of $100,000 or less) applies from 2nd September 2014.The government were previously trying to stop the schoolkids bonus from 30 June 2014.
- The loss carry-back rules were intended to provide companies with a refundable tax offset by allowing them to utilise a current year tax loss against a tax paid in a previous income year. The loss carry back rules have been repealed from 1 July 2013. This means that companies are only able to apply the loss carry back rules for the 2013 income year. From the 2014 income year onwards, companies will need to carry forward any tax losses to future income years subject to passing the continuity of ownership test or same business test.
Instant $6500 Asset Write off reduced to assets under $1000
The amendments will reverse the changes made by the previous Government that enabled small business entities (SBEs) to deduct assets costing less than $6,500 from 1 July 2012 onwards. From 1 January 2014, SBEs will only be able to claim an immediate deduction for depreciating assets costing less than $1,000. Any claims utilising the more generous write off amount in 2014 tax returns for assets purchased or installed ready for use from 1 January 2014 will need to be amended.
Depreciating assets costing $1,000 or more from 1 January 2014 should be allocated to the SBEs general small business pool and depreciated at 15% in the income year in which the assets are first purchased. The assets will then be depreciated as part of that pool at 30% in future income years.
Accelerated $5000 deduction for motor vehicles removed
The $5,000 immediate deduction for motor vehicles acquired by small business entities (SBEs) has been removed from 1 January 2014.
SBEs had until 31 December 2013 to qualify for the $5,000 immediate deduction by acquiring and using a motor vehicle over the value of $6,500 by this date.
For taxpayers that have already lodged their tax return and claimed the immediate deduction for a motor vehicle purchased after 1 January 2014, the tax return will need to be amended. No penalties will apply if the amendment is made in a “reasonable time”.
If you have any queries about the changes and how they will impact you, please contact our office.