May 2015 Budget
As this Budget has had few tax related changes, I will compare this Budget to last year’s Budget. Note the changes below to last year’s summary in bold.
We provide below a budget summary of the major tax changes.
It is often what does NOT CHANGE that is more important, such as the following:
- No additional tax on Super Funds in pension mode. SAME AGAIN
- No certainty as to the treatment of instant asset write off reducing from $6,500 to $1,000.
This was to have changed from 1 January 2014, however did not get passed by Parliament and
was not mentioned in the budget. NOW UP TO $20,000
- No major changes to the tax system. SAME AGAIN
2014 had 9 changes to the tax system.
2015 changes as per below:
- Accelerated depreciation up to $20,000 immediate write off of individual assets up to $20,000.
Despite the Treasurer and media claiming small business is a winner and will save $4,140 in
tax on buying $20,000 of equipment, it is only a timing advantage. In that now the tax saving
is this year, compared to spread over a 4 years.
Also, with the 5% tax cut for small business if purchased prior to 30 June 2015, the business would be $207 worse off over the life of the asset.
The accelerated depreciation applies from 13 May 2015 to 30 June 2017.
- 1.5% tax cut for small companies and 5% tax offset for small business.
Small business owners that currently pay themselves as wages instead of profit distribution should consider stopping wages for themselves from 1 July 2015. This will maximise the small business tax offset. The saving is to a maximum of $1,000 per year, so business owners used to paying their tax with wages, need to make sure they put away enough for tax.
- Please note that the 1.5% tax cut for small companies only relates to companies in business.
Therefore companies that only have investment income will not receive the discounted tax rate.
- Immediate deduction for setup expenses for the 2015-2016 tax year.
This will include legal and accounting fees to setup companies and new entities.