Budget 2014 contained a number of relatively minor changes that could go into the category of tax reform. None the less, there has been some changes, or at the very least a reinstatement of previous commitments. The Government currently has a number of key tax reform priorities to deliver in the short term.
Mineral Resources Rents Tax (MRRT)
The proposed repeal of the MRRT intended to take effect from 1 July 2014, will see the loss of a number of related measures, including:
• repeal of loss carry back regime with effect from the start of the 2013-14 income year
• removal of small business capital allowances concessions for depreciating assets that are first used and installed ready for use on or after 1 January 2014
• rephasing the increase of the superannuation guarantee to reach 12 per cent by 1 July 2022
Similarly, the repeal of the carbon pricing mechanism will take with it planned personal tax rate cuts and associated amendments to the low income tax offset.
The tax-free threshold for resident individuals will increase from $18,200 to $19,400 from 1 July 2015. Taking into consideration the top marginal rate, the Medicare levy will be 49 per cent for resident individuals.
Third party reporting and data matching
A Budget measure from last year ‘Tax Compliance-improving compliance through third party reporting and data matching’ has been deferred until 1 July 2016. The measure was originally intended to commence from 1 July 2014.
The measure was proposed to require a range of third parties including fund managers, brokers and financial service and property businesses to report on a variety of financial and transactional data.
The deferral of the start date will also allow additional consultation with affected entities, and time for impacted entities to adopt processes and systems to ensure compliance with the proposed measure.
As announced in last year’s budget, the Medicare levy will increase from 1.5 per cent to 2 per cent from 1 July 2014. The reason for the introduction of these changes have been to help fund the DisabilityCare Australia program.
Our accountants are at hand to deal with any questions or queries regarding this article.
Call (02) 4926 2300 or email us