A Change is Coming...

Proposed Taxation Changes 2013-14

The new Coalition Government has proposed various taxation changes for their first term. A large number of these are repeals of legislation that the Labor government only recently introduced.

Some of the important proposed changes are as follows:

Small Business Entities (SBE):

• Remove the increased immediate deduction for assets costing less than $6,500
• Remove the accelerated depreciation deduction for the first $5,000 of the cost of a motor vehicle

Companies:

• Reduce the company tax rate from 30% to 28.5% from 1 July 2015
• Introduce a 1.5% levy on companies, with a taxable income over $5 million, from 1 July 2015 (levy to apply only to the excess taxable income over $5 million)
• Abolish the loss carry-back measure for companies, which first applied in the 2012-13 tax year
• Abolish Mineral Resources Rent Tax and the Carbon Tax but retain most related assistance measures including the household assistance package

Individuals and Families:

• The above 1.5% levy on companies will be used to fund the paid parental leave scheme which will introduce 26 weeks of paid parental leave for mothers at their actual wage (capped at $150,000) or the national minimum wage (whichever is greater), plus superannuation
• Abolish the $2,000 cap on self-education expenses for individuals
• Remove the SchoolKids Bonus and not reintroduce the previous system of claiming benefits through the tax system
• Remove income testing for the private health insurance rebate. This will affect singles with income over $84,000 and families with combined income over $168,000 with private health insurance

Superannuation:

• Postpone the gradual superannuation guarantee increase to 12% for two years. The guarantee will remain at 9.25% until 1 July 2016 when it will increase to 9.5%. The final increase will happen on 1 July 2021
• Remove the low income superannuation co-contribution
• Fringe Benefits Tax (FBT):
• Repeal the recent changes to the Fringe Benefits Tax (FBT) system by reinstating the statutory formula method to calculate FBT applicable to motor vehicle contracts

The coalition have also promised to reduce the overall tax burden on businesses and taxpayers and improve understandability of the tax system over time through the use of these and other measures.