Last night Joe Hockey delivered the Abbott Government’s second budget.

As there is no shortage of commentary on the politics of the budget, we have focused on taxation and related changes within the budget and their impact of this budget on small businesses, individuals and families. There are other announcements, including some that will impact multinational corporations that have not been included below.

In the lead up to the budget it was sold as a budget for small business and this has come through clearly. The key announcements for small business are:

  • Reduction in the company tax rate to 28.5% (from 30%) from the 2016 financial year.
  • An increase in the instant asset write off to $20,000 (from $1,000) between 7:30pm last night and 30 June 2017.
  • A 5% tax discount, up to $1,000, for unincorporated small businesses (sole traders, partnerships and trusts).
  • An immediate deduction for professional expenses associated with starting a new business from 1 July 2015.
  • An expansion of the CGT roll-over relief provisions for small businesses that change legal structure from 1 July 2016.
  • Extending the FBT exemption for small businesses that provide employees with more than one work-related portable electronic device that performs substantially the same function.

Key taxation announcements that will impact individuals are:

  • Work-related car expenses deduction to be changed to only two methods (cents per km and logbook). The cents per km rate will be 66 cents per kilometre, irrespective of a car’s engine size. This does not impact salary packaged cars taxed under fringe benefits rules and will apply from 1 July 2015.
  • Australians living overseas will be required to repay their HELP debts where they earn income above the minimum HELP repayment threshold. From 1 January 2016, debtors going overseas for more than 6 months will be required to register with the ATO, while those already overseas required to register by 1 July 2017. Repayment obligations will commence from 1 July 2017 for income earned in the 2016-17 financial year.
  • A GST ‘Netflix’ tax will be applied to offshore intangible supplies from 1 July 2017.

While the following announcements are not strictly tax related announcements, as they will impact individuals and families, we considered it prudent to highlight them:

  • A new Child Care Subsidy will be introduced from 1 July 2017 which will replace the current Child Care Benefit, Child Care Rebate and Jobs, Education and Training Child Care Fee Assistance programmes.
  • The assets test for the Age Pension has increased, however the assets test taper rate at which the Age Pension begins to phase out will be increased. This will commence on 1 January 2017.
  • The Government has announced that it will introduce changes to stop people from claiming parental leave payments from both the Government and their employers, which will apply from 1 July 2016.

As with any budget, due to the politics, particular measures mentioned above may never be legislated. We will follow the measures that impact our clients and are always available for any questions regarding the Australian taxation environment.

If you would like additional detail about any of the budget measures announced last night, or schedule an appointment to discuss how they might affect you or your business, please contact us on 1300 884 797 today.