Trust taxation – changes to the taxation of trust income
As previously announced, the Government intended to introduce legislation, with effect from 1 July 2010,
enable the streaming of capital gains and franked distributions;
Target the use of low tax entities, especially exempt entities, to reduce tax payable on
the taxable income of a trust; and ensure that trust beneficiaries can continue to use the primary production averaging,
farm management deposits provisions in a loss year.
Due to the ruling in Bamford’s Case and the recent release of Tax Laws Amendment (2011 Measures No. 5) Bill 2011 (‘Bill 5′) containing the proposed trust ‘streaming’ rules for capital gains and franked dividends, trustees need to factor in the impact of these changes when making their 2011 resolutions no later than 30th June, 2011.
Changes effective Budget Night – 7.30pm 10 May 2011
Reforms to the car fringe benefit rules Statutory Formula method for determining the taxable value of car fringe benefits will be replaced with a single flat rate of 20% that applies regardless of the distance travelled. This reform will only apply to new vehicle contracts entered into after 7:30pm AEST on 10 May 2011, and is phased-in over four years.
Countering fraudulent activities by company directors
With effect from 1 July 2011:
the director penalty regime will be extended to superannuation guarantee amounts, making directors personally liable for their company’s failure to pay employee superannuation;
the ATO will be given the power to commence recovery against directors under the director penalty regime, without providing a 21 day grace period, for certain unpaid company liabilities that remain unreported after three months of becoming due; and in certain circumstances, directors and associates of directors will be prevented from obtaining credits for withheld amounts in their individual tax returns where the company has failed to pay withheld amounts to the ATO.
Changes effective 1 July 2012 ( 2012/13 income year)
Small business reforms
The Government has announced the following tax reforms for small businesses:
Entrepreneurs’ Tax Offset abolished – The ETO will be abolished with effect from the 2012/13 income year and replaced with the following small business measures.
Immediate $5,000 initial deduction for motor vehicles – Small businesses allowed to claim to $5,000 as an immediate deduction for new motor vehicles acquired from the 2012/13 income year. The remaining cost of the vehicle value will be added to the General Small Business pool and depreciated under the existing simplified depreciation rules for small business entities.
Small business measures previously announced – The Government’s tax reforms for small businesses include the following measures previously announced to apply from 2012/13:
– an immediate write-off of all assets valued at under $5,000 (currently, $1,000);
– a write-off of all other assets (except buildings) in a single depreciation pool at a rate of 30%, rather than two different depreciation pools (i.e., the general and long life pools), with two different depreciation rates (i.e., 30% and 5% respectively); and
– an early reduction in the company tax rate to 29% (previously announced as 28%) for incorporated small businesses. For all other companies, the corporate tax rate will be reduced to 29% for 2013/14 and then to 28% from 2014/15.
Superannuation – Higher concessional cap. A win for the over 50s From 1 July 2012, the higher concessional superannuation contributions cap for eligible individuals aged 50 and over with total superannuation balances of less than $500,000 will be set to $25,000 above the general concessional cap. The current transitional concessional contributions cap for eligible individuals over 50 is $50,000 (up to 30 June 2012).
Reporting taxable payments – Building and Construction Industry From 1 July 2012, many businesses will be required to report annually on payments made to contractors in the building and construction industry. The reporting regime will require businesses to report information that they should already collect under existing tax arrangements. The Government may consult industry to introduce a similar reporting regime for
payments to contractors in commercial cleaning activities.
Reporting superannuation to employees
From 1 July 2012, employees will receive information on their payslips about the amount of superannuation actually paid into their account, and employees and employers will receive quarterly notification from their superannuation fund if such regular payments cease.