Tax Changes Announced – Small Businesses Take Note!

The new parliament commenced last week and the Government introduced a series of bills to repeal the Carbon Tax from 1 July 2014.

The proposed scrapping of the Carbon Tax means that some of the incentives introduced to compensate for the increased cost of living, as a result of the introduction of the Carbon Tax, will also be removed.

Unfortunately this will mean a loss of some tax concessions for small business owners.

The main change for small business entities will be to remove the following two asset write-off concessions that have been in place since 1 July 2012:

Eligible small business taxpayers can currently claim an immediate deduction for assets costing less than $6,500.

From 1 January 2014, the immediate deduction threshold will be reduced to $1,000 and the $5,000 immediate write off for motor vehicle purchases will be removed.

Eligible Small Business Entities should act now and acquire motor vehicles and other assets before 1 January 2014!

Another concession to be removed is the loss carry-back scheme which was introduced in the 2012 budget and allows companies to “carry back” losses to offset prior year profits, resulting in a refund of tax paid on past profits. It will be repealed from 1 July 2014.

Other Coalition Government Changes

The Coalition Government intends to scrap the following tax proposals introduced under the previous Labour Government:

On 6 November 2013, the Federal Treasurer, Joe Hockey, confirmed that the Government will not proceed with the proposed tax on pension earnings above $100,000 a year. Pensions will remain tax free and the earnings within the superannuation funds will remain tax free once the fund is in pension phase.