- Upcoming ATO changes that might benefit your small businesses, including:
- Tax rate for base rate entity companies with turnover less than $50 million will decrease from 27.5% in 2018 – 2019 to 25% in 2021 – 2022
- Small business income tax offset will increase from 8% in 2018 – 2019 to 16% in 2021 – 2022
- Small business turnover will increase from $2 million to $10 million
<What’s new for small business _ Australian Taxation Office>
- Stephen Mungomery, who was attempting to cook the books for his wife’s business and intentionally depriving more than $1.2 million from ATO, was sentenced for 7 years on top of the court order to pay back reparations.
- TR 2019/D1 Income tax: income of international organisations and persons connected with them that is exempt from income tax
<https://www.ato.gov.au/law/view/document?DocID=DTR/TR2019D1/NAT/ATO/00001&PiT=99991231235958>
- As being hit by natural disasters, farmers can use simplified fuel tax credit methods to calculate their claims no matter how much you claim each year
- The Department of Industry, Innovation and Science has released new guidance material to help clarify the eligibility of research and development (R&D) activities for companies undertaking software development
- Federal Budget Report 2019 – 2020 has recently been released. Link to download<https://www.cpaaustralia.com.au/~/media/corporate/allfiles/document/media/federal-budget-report-2019-20.pdf?utm_source=exacttarget&utm_medium=email&utm_term=All%20Subscribers&utm_content=https%3a%2f%2fwww.cpaaustralia.com.au%2f~%2fmedia%2fcorporate%2fallfiles%2fdocument%2fmedia%2ffederal-budget-report-2019-20.pdf&utm_campaign=CPA+Tax+News+ed+12+-+2+April+2019_2-April-2019>Some highlights in the report have been well-presented by My Tax Savers <https://mailchi.mp/mytaxsavers/tax-ata-glance-1542915?e=38f2c9f55b>
BUSINESS- Instant Asset Write-Off Boosted and Expanded – Two key changes have been made:
- The write-off has been extended to medium-sized businesses (those with an aggregated annual turnover of less than $50 million.
- The threshold has been increased to $30,000.
Therefore, subject to legislation, businesses with an aggregated turnover of less than $50 million will be able to immediately deduct purchases of eligible assets costing less than $30,000 that are purchased and then first used, or installed ready for use, from Budget night (2 April 2019) to 30 June 2020.
- Division 7A Changes Deferred – The Government’s proposed Division 7A changes will be deferred by 12 months to 1 July 2020. To recap, Division 7A is designed to prevent profits or assets being provided to shareholders or their associates tax-free. You can read more about these proposed changes – which are not yet even in draft legislative form – on the ATO website.
- Crackdown on Unpaid Tax and Super by Larger Businesses – The Government will provide more than $40 million to the ATO to recover unpaid tax and Superannuation Guarantee owed by larger businesses.
- Strengthening ABN Rules – This measure imposes new compliance obligations on ABN holders to retain their ABN. From 1 July 2021, ABN holders with an income tax return obligation will be required to lodge their income tax return and from 1 July 2022 confirm the accuracy of their details on the Australian Business Register annually.
- Tackling Sham Contracting – The Government will provide more than $9 million to establish a dedicated unit within the Fair Work Ombudsman to address sham contracting. This is where employers seek to avoid statutory obligations and employment entitlements (such as paid leave and superannuation) by misrepresenting employer/employee relationships as independent contracts.
PERSONAL TAX CHANGES
- Income Tax Cuts by Increasing Tax Offset – Subject to the passage of legislation, tax relief will be granted to individuals via the non-refundable low and middle income tax offset (LMITO). The LIMTO will increase from a current maximum of $530 per year to $1,080. Further, the base rate will increase from $200 to $255 per year for 2018/2019 through to 2021/2022. Depending on your level of income, the changes will benefit individuals as follows:
- The LMITO will now provide a reduction in tax of up to $255 for taxpayers with a taxable income of $37,000 or less.
- Between taxable incomes of $37,000 and $48,000, the value of the offset will increase at a rate of 7.5 cents per dollar to the maximum offset of $1,080.
- Taxpayers with taxable incomes between $48,000 and $90,000 will be eligible for the maximum offset of $1,080.
- For taxable incomes of $90,000 to $126,000 the offset will phase out at a rate of 3 cents per dollar.
The LMITO will be enjoyed straight after individuals lodge their income tax returns for the above years.
- Income Tax Cuts via Rate and Threshold Changes – The following changes are slated for future income years:
- From 1 July 2022, an increase to the top threshold of the 19% personal income tax bracket from$41,000 to $45,000.
- From 1 July 2022, an increase in the low income tax offset (LITO) from $645to $700.
- New Deductible Gift Recipients (DGRs) Approved – The following organisations have been granted DGR status from 1 July 2019 to 30 June 2024: Australian Academy of Law, China Matters Limited, Foundation Broken Hill Limited, Motherless Daughters Australia Limited, Superannuation Consumers Centre Limited, and The Headstone Project (Tasmania) Incorporated. The Government will also establish a deductible gift recipient (DGR) general category to enable Men’s Sheds and Women’s Sheds to access DGR status from 1 July 2020.
SUPERANNUATION CHANGES
- Removal of Work Test for Certain Taxpayers – The current superannuation work test will be removed for people aged 65 and 66 from 1 July 2020.
- Extending Eligibility for the Bring-Forward Cap – From 1 July 2020, access to the bring-forward cap will be extended from taxpayers aged less than 65 years of age to those aged 65 and 66.
- Increase to Age Limit for Spouse Contributions – The age limit for spouse contributions will increase from 69 to 75 from 1 July 2020.
Best Regards,
Teresa Tran & Associates
