In this Sky Update, we bring you all the latest tax news along with some other items that may pique your interest.
Personal middle income tax rate cut
On the 16th of September, the Bill to implement the 2016 Budget proposal to increase the third income tax threshold that applies to personal income taxpayers was passed into law.
The rate of tax payable on individuals’ taxable incomes from $80,001 to $87,000 will fall from 37% to 32.5%. The non-resident tax schedule will also be amended as a result of the Bill, increasing the upper limit of the first income tax bracket to $87,000.
As a consequence, the ATO have issued new PAYG withholding schedules that need to be applied by employers for salary and wage payments from 1 October 2016.
New R&D Tax Incentive rates from 1 July
Historically, the Research & Development Tax Incentive has consisted of a tax offset for eligible R&D expenditure of:
- 45% (refundable) for firms with annual turnover of less than $20M; and
- 40% (non-refundable) for firms with annual turnover of $20M or more.
Legislation to amend the rates from 45% to 43.5% and from 40% to 38.5% received Royal Assent in September with the new rates to apply from the 2017 financial year (1 July 2016).
Notwithstanding the reduced rates, the Tax Incentive remains an attractive proposition for firms undertaking eligible Research & Development activities.
Please do not hesitate to contact our office if you would like more information on the Research & Development Tax Incentive.
Small business tax breaks in the pipeline
A Bill has been introduced to Parliament to implement the small business changes announced in the last Federal Budget. These changes include:
- Increasing the small business entity turnover to $10 million from 1 July 2016;
- Increasing the unincorporated small business tax discount from 5% to 16% over a 10-year period; and
- Lowering the company tax rate to reach a unified company tax rate of 25% in the 2026–2027 income year.
Small business entities with aggregated turnover of less than $10 million will soon be able to access a number of small business tax concessions, including immediate deductions for start-up expenses and simpler depreciation and trading stock rules.
We will keep you updated as the Bill makes it’s way through the legislative process.
Single Touch Payroll
Legislation to establish a new reporting framework, Single Touch Payroll (STP), has been passed by Parliament.
Under the Single Touch Payroll framework, “substantial employers” (entities with 20 or more employees) will be required to report salary & wage payments (& associated PAYG withholding) and superannuation contributions to the ATO in real-time from 1 July 2018.
No mandatory compliance date has been set for employers with fewer than 20 employees. However, these employers will have the ability to opt in from 1 July 2017.
Take care with work-related deductions
The ATO has issued a media release reminding individuals to make sure they get their deductions right this tax time. Assistant Commissioner Graham Whyte said the ATO has seen “claims for car expenses where logbooks have been made up and claims for self-education expenses where invoices were supplied for conferences that the taxpayer never attended”.
Mr Whyte said that in 2014–2015 the ATO conducted around 450,000 reviews and audits of individual taxpayers, leading to revenue adjustments of over $1.1 billion in income tax. Mr Whyte said “every tax return is scrutinised”, and if a red flag is raised and the claims seem unusual, the ATO will check them with the taxpayer’s employer.
Social welfare recipients data-matching
The Department of Human Services (DHS) has released details of a data-matching program which will enable it to match income data it collects from social welfare recipients with tax return-related data reported to the ATO.
The data matching will assist DHS to identify social welfare recipients who may not have correctly disclosed their income and assets.
The DHS expects to match approximately seven million unique records held in the Centrelink database and anticipates that they will examine approximately 20,000 records in the first phase of the project.
Tourism Demand Driver Infrastructure Program – Applications close 11 November
Funding from the TDDI program will generally be between $250,000 and $750,000, with projects be completed by 30 June 2018.
The TDDI funding is available to tourism related businesses, investors, local governments, tourism associations and State Government bodies.
Applicants are encouraged to seek comment from their local Regional Tourism Board or Destination Melbourne, in respect to how their project will align to local priorities.
Funded projects should create and encourage visitation to a destination and assist in meeting Tourism 2020 targets. Eligible projects, and examples for each, include:
- Environmental – the development or enhancement of natural assets such as protected and recreational areas, public spaces such as beaches and parks and walking trails.
- Built – such as mixed-used facilities, convention facilities, cultural institutions, entertainment and sporting facilities, city/town precincts and tourist attractions.
- Transport – such as roads, rail networks, ports and airports.
- Enabling – such as tourism networks, plans and feasibility studies, and programmes to improve industry capability and capacity (eg destination management planning, business planning, workforce development, cultural awareness, digital product development).
Australian Accounting Awards 2016
Sky Accountants is proud to announce that for the second consecutive year, we have been named as a finalist in the “Innovator of the Year” category of the accountantsdaily Australian Accounting Awards.
The winners are to be announced on the 14th of October.
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