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Federal Budget 2014 - Business


Wednesday 14th of May 2014

Business

 

The good news for business is that the decrease in the company tax rate from 1 July 2015 is safe for now.  The bad news is that there are a series of other costs to contend with.

 

Company tax rate reduction remains

The Government will go ahead with the scheduled reduction in the company tax rate by 1.5% from 1 July 2015. For large companies, the reduction will offset the cost of the Government's Paid Parental Leave levy.

 

Fringe Benefits Tax rate increase

Tying in with the 2% debt tax (see Individuals), the Government has announced that the FBT rate will increase from 47% to 49% from 1 April 2015 until 31 March 2017 to prevent high income earners trying to avoid the levy.

The problem is if you run a business and you are not trying to avoid the debt tax, you’re going to pay more in FBT regardless. 

The cash value of benefits received by employees of public benevolent institutions and health promotion charities, public and not-for-profit hospitals, public ambulance services and certain other tax-exempt entities will be protected by increasing the annual FBT caps. In addition, the fringe benefits rebate rate will be aligned with the FBT rate from 1 April 2015.

Date of effect

1 April 2015

 

Government initiatives and programs for business

 

Incentives for employing workers over 50

From 1 July 2014, a payment of up to $10,000 will be available to employers who hire a mature age job seeker (including those on the Disability Support Pension) aged 50 years or over who has been receiving income support for at least six months.

 Payments will start after the worker has been employed for at least 6 months and paid in instalments:

  • $3,000 after 6 months of employment;
  • $3,000 after 12 months of employment;
  • $2,000 after 18 months of employment; and
  • $2,000 after 24 months of employment.

Date of effect

1 July 2014

 

Instant asset write-off situation unresolved

No arrangements have been made within the Federal Budget for the continuing uncertainty over the state of the instant asset write-off, mainly because its fortunes are tied to the  repeal of the mining tax. Abolishing the latter would have also seen the instant asset write-off reduce to $1,000 from $6,500 with effect from January 1, 2014. However the mining tax repeal has not passed the Senate, and no mention was made of the tax treatment for such assets (nor regarding the rules for motor vehicles).

The question remains whether the instant asset write-off and motor vehicle rule changes will still apply from January 1, 2014 or what the treatment would be should these measures be passed by the new Senate after July 1. This continuing uncertainty for small businesses is not helpful. The Budget would have been an ideal opportunity to provide clarity and the failure to do so is to be condemned.


R&D tax incentive rates reduced

The rates of the refundable and non-refundable offsets for the Research and Development (R&D) Tax Incentive will be reduced by 1.5%.
So from July 1, 2014:

  • 43.5% refundable tax offset (used to be 45%) for eligible entities with an aggregated group turnover of less than $20 million, provided they are not controlled by income tax exempt entities, and
  • 38.5% non-refundable tax offset (used to be 40%) for all other eligible entities.

 

The above general information is not intended as advice. It has not taken into account your personal situation or needs. You should seek professional advice out your circumstances to make sure you apply the above general information to your needs correctly.

CALL Michael Adams on 0439 909 508 for professional accounting advice and better business solutions.

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