Tax Updates for the 2015-2016 Financial Year

The Instant Asset Write-off:

Small businesses can immediately deduct the business portion of most assets costing less than $20,000 if they were purchased between 12 May 2015 and 30 June 2017. This deduction can be claimed through the tax return.

 

Company Tax Cuts for Small Business:

The small business company tax rate was reduced from 30% to a whopping 28.5% for income years commencing on or after 1 July 2015. The updated rate also applies to small businesses that are corporate unit trusts and public trading trusts. The maximum franking credit that can be allocated to a frankable distribution remains steady at 30%, even if the small business is eligible for the new 28.5% tax rate. The company tax rate remains at 30% for ALL other companies that are not considered to be small business entities.

The NEW Gender Identifiers:

The Attorney General’s guidelines on the recognition of sex and gender acknowledge that individuals may identify and be recognized within the community as either:

  • A gender other than the sex (male or female) they were born as
  • An indeterminate sex and/or gender

 

The guidelines standardise the way the ATO collects and uses gender information. The spouse details section of the tax return now asks for gender and provides three options to select from:

  • Male
  • Female
  • Indeterminate

 

Net Medical Expenses Tax Offset Phase-out:

As of 1 July 2015, this offset can ONLY be claimed by taxpayers with net expenses for the following:

  • disability aids,
  • attendant care, or
  • aged care

The offset will be 100% abolished from 1 July 2019. For more information, check out our blog post about the Net Medical Expenses  Tax Offset and other offsets that may apply to you.



Work-related Car Expenses:

As announced in the 2015 Budget, the four methods of car expense deduction have been reduced to just two. This change is effective 1 July 2015. The available methods are as follows:

  • cents per kilometre
  • logbook

For more information, check out our blog post about the ATO’s available calculation methods.

 

Temporary Budget Repair Levy:

A Temporary Budget Repair Levy was introduced as part of the 2014-2015 Budget, stating that individual taxpayers with a taxable income of more than $180,000 per year will have had additional tax withheld by their employer, starting 1 July 2014. The levy is payable at a rate of 2% of each dollar of a taxpayer’s taxable income over $180,000. It applies to both residents and non-residents for the following income years:

  • 2014-2015,
  • 2015-2016, and
  • 2016-2017

If the levy applies to you, it will typically appear on your Notice of Assessment.



Repaying your HELP or TSL Loan from Overseas:

If you live overseas and have a Higher Education (HELP) or Trade Support Loan (TSL) debt, you now have the same repayment obligations as those who live in Australia. This applies if you already live or intend to move overseas for a total of more than 6 months in any 12-month period. Beginning 1 January 2016, you’ll need to notify the ATO within 7 days of leaving Australia. If you already reside overseas, then you will need to update the ATO with your details no later than 1 July 2017. From this date on, if you are living overseas and earning an income that exceeds the minimum repayment threshold, you will be required to make compulsory repayments towards your debt.



Zone Tax Offset Eligibility:

Beginning 1 July 2015, eligibility is based on your usual place of residence. If your usual place of residence was not within a zone, you are not eligible for the zone tax offset. Certain types of workers are likely to be affected (eg: fly-in fly-out workers).

 

For more information, check out our blog post about the Zone Tax Offset and other offsets that may apply to you.