2015 Federal Budget Review & Tax Planning

2015 Federal Budget Review & Tax Planning

The Federal Treasurer Joe Hockey has handed down the Budget for the 2015/16 year.

This year’s approach to the Budget is vastly different from the 2014 version in that it focuses on stimulating the economy through a range of small business initiatives whilst turning an eye to creating cost savings & raising revenue with a range of initiatives that in the main should be well supported by the electorate.

So whilst the economic backdrop remains reasonably similar to that in 2014 it seems that the Coalition are taking a less controversial stance with this 2015 Budget. An early election may be in the wings ……..

Business
The Budget provides a $5.5 billion small business package as the vehicle to stimulate spending and grow the economy. We note that the package is restricted to the “small” business sector (less than $2M revenue) and unfortunately excludes the “mid-size” business sector ($2 – 5M revenue) and the “large” business sector. However, we note that 96% of businesses are in the small category. The key initiatives for small business include:

  • Immediate tax deduction for items up to $20,000 if installed and ready for use between 12/05/2015 and 30/06/2017;
  • Immediate deduction if value of existing depreciation pool is less than $20,000;
  • Reduction in company tax rate from 30% to 28.5% for 2016 FY;
  • 5% tax rebate (limited to $1,000) for unincorporated businesses (Sole trader, Trust, Partnership);
  • Immediate deduction for business start-up expenses;
  • FBT exemptions for providing employees with work related electronic devices;
  • CGT relief for business restructures;
  • Employee Share Schemes to become more accessible to small business.

For further details we provide this link to the Chartered Accountants Federal Budget summary:

Chartered Accountants Federal Budget 2015-16

 Personal Wealth & SMSF
In terms of personal wealth & SMSF initiatives we note that no news is good news!

The Coalition have made good on their promise not to tinker with superannuation and there were no significant changes to personal taxation. We can’t be sure for how long they will keep that promise and suspect that any initiatives in this area will become election issues. So our advice is to make hay while the sun shines ……..

We note that there were initiatives related to welfare, child care etc. For further details we provide links to the Financial Planning Association and SMSF Association Federal Budget summaries:

 Financial Planning Association – Budget Wrap 2015

 SMSF Association – Budget Update 2015 – 16

30 June 2015 – Tax Planning Opportunities
With May & June being the traditional tax planning season we see the following opportunities arising from the Budget:

  1. Small businesses can claim an instant tax deduction up to $20,000 for business items purchased (or financed) prior to 30 June 2015.
  2. Tax deductible (concessional) superannuation contributions up to $30,000 (or $35,000 for those aged 49 or over on 30 June 2014) where the contribution is made prior to 30 June 2015.
  3. Non-concessional super contributions up to $540,000 remain available to those aged under 65. These concessions are available on an annual “use it or lose it” basis. They represent an opportunity to invest in the “tax friendly” super environment and should be strongly considered from a wealth creation and tax planning perspective.

There are many other Tax Planning opportunities available for Businesses and Individuals in the lead up to 30 June 2015. Keep an eye out for our Tax Planning 2015 emails in the coming weeks and p

lease don’t hesitate to contact us with any questions or to book a Tax Planning meeting.

 

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