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What’s New in 2008 |
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| Jan | Feb | Mar | May | Sept | Oct | Nov | Dec | If you want to see earlier news items please use the following links: Wayne Swan's 2008/9 Budget News in 2007 News in 2006 News in 2005 Note: News items include proposed legislative changes which generally take effect at a later date. REDUCTION OF THE QUARTERLY PAY-AS-YOU-GO INSTALMENT DUE IN FEBRUARY 2009 FOR SMALL BUSINESSES The quarterly pay-as-you-go (PAYG) instalment payable on 21 January 2009 or 28 February 2009 is to be cut by 20 per cent. This 20 per cent reduction will be available to small business entities - generally those with aggregated turnover of $2 million per annum or less. COMMISSIONER RELEASES TAX DETERMINATION SETTING OUT THE MINIMUM VALUE OF THE GOODS THAT WILL BE ACCEPTED AS BEING TAKEN AS PRIVATE USAGE FOR THE 2008/09 YEAR OF INCOME FOR SPECIFIC TYPES OF BUSINESSES. INVESTMENT ALLOWANCE TO BOOST BUSINESS INVESTMENT An announcement was made on the 12th December 2008 by the Rudd Government to boost economic activity and support jobs with a 10% temporary investment allowance – in the form of a tax deduction. This is to encourage important capital investment by Australian businesses. Details of the allowance may be obtained from the link below: 2008 CHANGES TO THE GST MARGIN SCHEME Changes the way the margin scheme works when you sell property you acquired as any of the following:
If you use the margin scheme to work out the GST you must pay when you sell a property you acquired in one of the above ways, you:
The change does not normally apply to property you acquired under contracts entered into before 9 December 2008.
ATO INDUSTRY BENCHMARKS
The Tax Office has issued benchmarks for specific industries. These benchmarks indicate an expected range of income for businesses working directly with household consumers and cover the following areas:
Concreting, floor sanding and polishing, metal roofing, painting, roof guttering, roof tiling and taxis. Businesses can use the benchmarks to compare their performance to the rest of the industry, and check that their tax records accurately reflect their business practices. ATO EXAMINING TRUST ARRANGEMENTS WHERE MONIES BORROWED The ATO have released a draft taxation determination providing the Commissioner’s preliminary, though considered, view on interest deductions relating to money borrowed by taxpayers to subscribe for units in certain uncommercial trusts. The ATO are also looking at the entities involved in marketing these uncommercial trust arrangements and in a number of cases they are considering, or are in the process of taking, action against them under the promoter penalty laws which apply from April 2006. FRINGE BENEFIT TAX AND CHRISTMAS PARTIES In November 2007 the ATO issued a fact sheet in relation to this complex area of FBT. The fact sheet looks at the issue from both a tax paying and tax exempt body view. Refer to the ATO website. DRAFT SELF MANAGED SUPER FUND RULING ISSUED The ATO has issued a draft SMSF ruling to provide the meaning of terms used in superannuation legislation in the relation to “in-house assets”. ALLOCATING FUNDS EARNED IN SELF MANAGED SUPER FUNDS The ATO has issued a fact sheet explaining what income is applied to which of the various member benefit components – taxable component, tax-free component, contributions segment and crystallised segment. Refer to the ATO website. ATO PROVIDES GUIDANCE ON CHANGES TO FBT RULES The ATO have released a fact sheet in relation to the new rules regarding benefits which are exempt from fringe benefits tax (FBT) – being work-related items. In the 2008 budget, changes were announced to the work-related item exemption and these changes are now law. Depending on when the item was purchased or the contract was entered into, the previous law or the amended law may apply. DRAFT LEGISLATION FOR COMMENT ISSUED – CHANGES TO SMALL BUSINESS CGT CONCESSIONS The small business entity test does not cover business structures where the CGT asset is owned by an entity but it is used in a related entity which carries on the business. Also there are issues relating to partnerships. Changes were announced in the 2008/09 budget to address these matters and the draft legislation is now available for comment by interested parties.
FIRST HOME SAVER BILLS NOW LAW The legislation to give effect to the new First Home Saver accounts has now become law. This new measure was promoted by both major political parties back in November 2007 when elections were pending.
The Government has confirmed that it will deliver in full the tax cuts it announced during the 2007 election campaign and contained in Tax Laws Amendment (Personal Income Tax Reduction) Bill 2008, currently before Parliament. These tax cuts included deferring the previously budgeted reductions in the top marginal tax rate for taxpayers on incomes of more than $180,000 per annum until beyond 2010-11. The savings of $5.3 billion over the forward estimates period will be diverted to the Government’s other spending priorities including the Education Tax Refund, reducing elective surgery waiting lists and to the budget surplus.
In its election commitments, the Government also set an aspirational tax goal over 6 years for a personal income tax system which reduces the number of rates from 4 to 3 with a personal income tax scale of 15%, 30% and 40%. The effective tax free threshold for those eligible for the low income tax offset would also increase to $20,000 by 2012-13, through an increase in the value of the offset. The Government now says that this goal is dependent on national and international economic conditions and maintaining, as a general principle, sound budget surpluses.
Eligible families
will be able to claim a 50% refund every year for key education expenses
up to: The refundable tax offset will apply to expenses incurred from 1 July 2008 and will be claimed upon lodgement of a 2008–09 income tax return. MEDICARE LEVY THRESHOLD INCREASES The Government will increase the Medicare levy low income thresholds to $17,309 for individuals and $29,207 for individuals who are in families, with effect from 1 July 2007. The additional amount of threshold for each dependent child or student will also increase to $2,682. The increase in these thresholds takes into account movements in the Consumer Price Index and ensures that low income families and individuals are not liable to pay the Medicare levy. The Government will also increase the Medicare levy threshold for pensioners below Age Pension age to $22,922, with effect from 1 July 2007. This increase will ensure that pensioners below Age Pension age do not pay the Medicare levy when they do not have an income tax liability. The Government will increase the Medicare levy surcharge (MLS) thresholds for singles from $50,000 to $100,000 and for those who are members of a family from $100,000 to $150,000, with effect from 1 July 2008. REDUCTION IN ELIGIBILTY FOR DEPENDANCY TAX OFFSETS The Government will introduce an income threshold of $150,000 for the claimant to determine eligibility for the Dependent Spouse, Housekeeper, Child Housekeeper, Invalid Relative and Parent/Parent in law tax offsets, with effect from 1 July 2008. From 1 July 2009, the Government will align the definition of income for these offsets with that applying to family assistance payments. In addition, the income threshold of $150,000 will be indexed from 1 July 2009. The amount of income for those eligible to claim the senior Australian tax offset will increase from $28,867 for singles and for each member of a couple to $24,680 from 1 July 2008. Further increases have been set for the 2010 and 2011 tax years. The Government will introduce an income test for the entrepreneurs’ tax offset (ETO), with effect from 1 July 2008. The measure reduces the existing concession and tax expenditure through better targeting. The ETO provides a 25% tax offset for small businesses with annual turnover of less than $75,000, which begins to phase out for turnover greater than $50,000. The income test will focus the benefit of the ETO towards genuine small businesses, by restricting eligibility for singles from $75,000 and families from $120,000 adjusted taxable income per year. The Government will provide a tax exemption for rent assistance paid to Austudy recipients, with effect from 1 July 2007. The Government will provide an income tax exemption of up to $1,000 to apprentices who receive early completion bonuses in skill shortage occupations from the Queensland Government. The measure will have effect from 1 July 2008. The Government will provide an income tax exemption for the Carer Adjustment Payment (CAP), with effect from 1 July 2007. The CAP provides financial assistance to families who have a child, aged up to six years, who has suffered a catastrophic event at some point after 1 January 2007 EXTENSION OF SMALL BUSINESS CONCESSIONS The Government will increase access to the small business capital gains tax (CGT) concessions for taxpayers owning a CGT asset used in a business by a related entity and for partners owning a CGT asset used in the partnership business, with effect from the 2007-08 income year. Currently, the small business entity test does not cover business structures where the CGT asset is owned by an entity but is used in a related entity which carries on the business. In addition, for partnerships, the small business entity test requires the taxpayer making a capital gain to be a partner in the partnership and for the asset to be an asset of the partnership. This measure will allow these structures and assets to qualify for the CGT small business concessions. The Government will tighten the current FBT exemption for certain work related items (including laptop computers, personal digital assistants and tools of trade) by ensuring the exemption only applies where these items are used primarily for work purposes. The FBT exemption will generally be limited to one item of each type per employee per year. The measure will apply to items purchased after 7.30 pm (AEST) on 13 May 2008. The measure reduces the FBT concession and tax expenditure for work related items. The measure will ensure consistency with the rules applying to mobile phones, computer software, and protective clothing. The current list of FBT exempt work related items will also be updated to reflect changes in technology. The Government will also deny employees depreciation deductions for FBT exempt items (that is, items purchased primarily for work purposes) purchased from 7.30 pm (AEST) on 13 May 2008. For items purchased before that time, employees will be denied depreciation deductions for the 2008-09 and later income years. This measure will ensure that employees are no longer able to gain a double benefit by obtaining an FBT exempt item (such as a laptop computer) from their pre tax income, and then claim a deduction for depreciation. The Government will amend the fringe benefits tax (FBT) law to ensure that the full value of a benefit that has been provided to both an employee and an associate in relation to a jointly held asset will be subject to FBT. This tax integrity measure will have effect for new arrangements from 7.30 pm (AEST) on 13 May 2008. The measure will re establish the principle that income and deductions arising from jointly held assets should be allocated between joint owners according to their legal interests. Employees who have already entered into salary sacrifice agreements with their employer will be able to utilise existing arrangements until 31 March 2009 (that is, the end of the current FBT year). This will provide time for employers and employees to renegotiate salary packages to avoid incurring a FBT liability. The Government will tighten the fringe benefits tax (FBT) exemption that applies to the private use of business property on an employer’s premises by excluding meals under a salary sacrifice arrangement, with effect from 7.30 pm (AEST) on 13 May 2008. The measure reduces the FBT concession and tax expenditure associated with property provided on the employer’s business premises. Existing balances on meal cards as at 7.30 pm (AEST) on 13 May 2008 will remain eligible for the FBT exemption, provided they are used by 31 March 2009. Any supplementation of existing balances after 7.30 pm (AEST) on 13 May 2008 will be subject to FBT. The Government will ensure that the interactions between a number of provisions in the GST law do not allow real property transactions to be structured to reduce the GST liability. The GST provisions dealing with real property are intended to ensure that GST is payable on the value added to land once it enters the GST system. The margin scheme achieves this outcome by applying GST to the ‘margin’, that is, the difference between the purchase price paid by the seller and the price paid by the buyer. This new measure provides that, where the margin scheme is used after a GST free or non taxable supply, the value added by the registered entity which made that supply is included in determining the GST subsequently payable under the margin scheme. The measure will also strengthen the GST anti avoidance provisions to ensure that they can apply to contrived arrangements entered into to avoid GST. As a consequence of this proposed measure, the Government will not proceed with a tax integrity measure previously announced in the 2005-06 Budget and then deferred in the 2006-07 Budget. This was an integrity measure designed to prevent the interaction of the margin scheme with the GST free going concern and the GST free farmland provisions from inappropriately reducing GST revenue. Instead, the Government has decided to introduce a better targeted integrity measure referred to above. In a media release issued on 13 May 2008, the Minister for Superannuation and Corporate Law, Senator Sherry, said that the Government will provide funding of $16 m over 3 years to set up an optional superannuation clearing house facility to cut the red tape burden on businesses across Australia. A superannuation clearing house will allow an employer to pay their contributions to a single location. The clearing house will then distribute them to the relevant superannuation funds as selected by their employees. DEPRECIATION OF IN-HOUSE SOFTWARE The Government will increase the period over which capital expenditure on in house computer software is depreciated from 2.5 years to 4 years. This will apply to expenditure incurred on or after 7.30 pm (AEST) on 13 May 2008. The measure reduces a tax concession and tax expenditure. This measure has an ongoing gain to revenue which is estimated to be $1.3 billion over the forward estimates period. In house software is computer software, or the right to use computer software, that is acquired, developed or developed by someone else and that is mainly used by the taxpayer in performing the functions for which the software was developed (that is, not for resale). This would include off the shelf software acquired for use by a taxpayer. Expenditure on in house computer software will continue to be depreciated on a straight line basis. The Government will increase the luxury car tax rate from 25% to 33%, with effect from 1 July 2008. There will be no change to the luxury car tax threshold (currently $57,123) from which the luxury car tax applies.
There are some limited exceptions.
| Jan | Feb | Mar | May | Sept | Oct | Nov | Dec |
If you would like further information regarding these new measures please contact Rose Cotter at Cotter Accountancy.
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Principal - Rose Cotter
Tax Lodgement and Payment Dates for 2008 Click here to find out what are the important dates for 2008.
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