Carbon Tax Repeal – Changes that may impact you!

The government has announced that it will repeal many of the tax measures both given to and taken from small businesses and individuals as a result of the repeal of the Carbon Tax (expected by 1 July 2014).

The following measures will be removed:

  • Small business entities, turning over less than $2 million annually, will no longer be entitled to receive an immediate $5,000 tax deduction for motor vehicle purchases or immediate tax deduction for other asset purchases less than $6,500. This applies to both new and second hand assets primarily used for business purposes. You do still have time left to take advantage of this because the change is effective from 1 January 2014. From 1 January the threshold will revert to $1,000.
  • The tax loss carry back rules for companies are being removed. For 2013 the losses of companies could be carried back and offset against prior year income. This resulted in a refund of income tax paid on the prior year income. The bill to repeal this has been tabled but not yet enacted, it will apply from the 2013-14 income year and later income years.

The following measures will not proceed:

  • Self-education expenses cap.
  • FBT statutory method to remain much to the delight of the novated car leasing industry.
  • Tax on superannuation pension earnings that exceed $100,000.
  • Phasing up of super guarantee charge to 12% by 2019 – it is now proposed that the SGC will remain at 9.25% in 2015 and 2016, increasing to 9.5% in 2017 and thereafter by half a percentage point each year until 2021.
  • Grant of the schoolkids bonus.

The following measure will still proceed:

  • Phasing out of the 20% medical expense tax offset.