What changed on 1 July 2013?
Here is a brief summary of what changed on 1 July:
The minimum rate for superannuation guarantee contributions increases from 9% to 9.25%. The rate will continue to increase steadily until it reaches 12% from 1 July 2019 onwards.
The upper age limit for super guarantee has been removed. That means eligible employees aged 70 and over will receive super guarantee.
For those aged 60 and over, you will be able to contribute more to superannuation with the concessional contributions cap increasing to $35,000 (up from $25,000). The concessional contributions cap for those aged 50 and over will increase to $35,000 from 1 July 2014.
An increased tax rate applies on contributions made by high-income earners with a 'total income' in excess of $300,000.
The net medical expenses tax offset (NMETO) will be abolished although there will be a transitional period for those currently claiming the offset. The NMETO previously allowed you to claim a tax offset for medical expenses above the threshold.
For the 2013 income year, companies will be able to carry back up to $1m of tax losses incurred in the 2013 income year to recoup tax paid for the 2012 income year. This change assumes the legislation makes it through Parliament. The refundable tax offset that can be claimed is limited to the company's franking account balance for that year.
1. Changes effective 1 July 2012 (i.e., 2012/13 income year)
1.1 Increase the small business instant write off threshold from $1,000 - $6,500
New rules and generally enable small business entities (SBE) taxpayers to maximise depreciation deductions in relation to depreciating assets acquired on or after 1 July 2012 (i.e., in the 2013 and later income years).
The key amendments to the depreciation rules associated with SBE's are summarised as follows:
1. Consolidation of the SBE pools into a single pool
Broadly, from 1 July 2012, the long-life SBE pool has been consolidated with the general SBE pool so that all depreciating assets (except those that are eligible for an immediate write-off - refer below) are now depreciated in a single pool, being 15% in the year of purchase and 30% once the asset is part of the general pool (i.e., in the years after the asset was acquired). Under the old rules, assets with an effective life of 25 years or more were required to be allocated to the long-life SBE pool and depreciated at a rate of 5% (2.5% in the first year). As such, SBE taxpayers will benefit from increased depreciation deductions from the 2013 income year, in respect of assets previously allocated to the long-life SBE pool.
2. Increase in the small business instant asset write-off threshold deduction from $1,000 to $6,500 - Broadly, the impact of this change is two-fold:
From 1 July 2012 (i.e., the 2013 income year), an immediate deduction can be claimed in the income year a depreciating asset costing less than $6,500 is first used or installed ready for use for a taxable purpose.
Also from 1 July 2012, if closing balance of the new general SBE pool is less than $6,500, an immediate deduction can be claimed for the closing pool balance.
3. Introduction of an immediate deduction of up to $5,000 for motor vehicles acquired in the 2013 and later years
It is important to note that the new rules only apply to business taxpayers that qualify as an SBE (basically, businesses with an annual turnover of under $2million), and generally apply where the taxpayer starts to use the depreciating asset (or installs the asset ready for use) for a taxable purpose on or after 1 July 2012 (i.e., in the 2013 or later income years.
Feel free to call (03) 5559 1444 for a free discussion, on how the changes will impact your business.