2015/16 Key Tax Changes

o Small business $20,000 tax break is still available – Started May 2015 and until July 2017 small business turnover less than $2 million can claim immediate tax deduction of asset purchases of up to $20,000. Only assets valued at $20,000 or less qualify. Assets with purchase prices of more than $20,000 will need to be depreciated normal way.

o Simplified car expenses claim – From 1 July 2015 work-related car expenses to be simplified. Removed 12% Market Value method and One Third of Car Expenses method from the individual income tax return. The available options are Log book (unlimited km) and Cents per km (max 5,000km) methods. If cents per km is used, you must use the single rate of 66 cents per km regardless of the engine size of the motor vehicle. Type or Capacity of the vehicles is no longer considered for motor vehicle deduction claims.

o Small business income tax offset for sole traders & partnership – From the 2015/16 financial year, an individual is entitled to a tax offset on the tax payable on the portion of their income from sole trade activities, share of net small business income from partnership or trust that is less than $2M turnover. 5% tax discount and maximum capped at $1,000.

o Net medical expenses tax offset phased out – The offset is now claimable only for taxpayers with out-of-pocket medical expenses relating to disability aids, attendant care, or aged care.

o Small business tax offset for companies with annual turnover less than $2 million – From July 1 this year, small companies with less than $2 million turnover will have their tax lowered from 30% to 28.5%. This lower rate also applies to small businesses that are corporate unit trusts and public trading trusts. All other companies the tax rate will remain at 30%. The maximum franking credit that can be allocated to a frankable distribution is unchanged at 30%, even if a small business is eligible for the 28.5% tax rate.

o Abolish First Home Saver Accounts – They are reverted to ordinary savings accounts from 1 July 2015. They will be treated as normal savings interest earnings.

o Changes to gender identifiers – From 2015/16 individual tax return, a person may identify himself/herself the sex other than male or female. New category introduced called an indeterminate sex.

o Higher Education Loan Programme for Australians residing overseas to repay their HELP debts – From 1 July 2017, if you are living overseas and earning an income that exceeds the minimum repayment threshold, you will be required repay HELP debts. Only those graduates living overseas and earning income above the minimum HELP repayment threshold (AUD $54,869 in 2015/16) will be required to make repayments.

o Immediate deduction for professional services in small business start-ups – From 1 July 2016 small businesses to immediately deduct a range of professional expenses associated with starting a new business, such as legal and accounting service establishing a company, trust or partnership.

o Working holiday tax put on hold until after the Federal election this year – The tax residency rules will change to treat most people who are in Australia temporarily for a working holiday as non-residents for tax purposes, regardless of how long they are here. This means that those on working holidays lose access to the tax-free threshold, low income tax offset and lower tax rates. Instead, they will pay 32.5% tax on every dollar they earn.

o SuperStream – Small employers (19 or fewer employees) and SMSF must be using the SuperStream by 30 June 2016. Exemptions for SMSF if it doesn’t receive any employer contributions, or the only employer contributions are from a related-party employer.