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Instant Asset write off extended for small business

Thu, 23 May 2024 00:00:00 GMT

As part of the 2024 Federal Budget, the Federal government has announced a one year extension to the increase in the instant asset write-off threshold to $20,000.

With the temporary threshold increase announced (yet to be legislated) in the 2023 Federal Budget due to expire on 30 June 2024, this extension means small businesses can immediately deduct the cost of eligible assets in their 2024-25 income tax return.

Eligibility criteria

The following conditions must be satisfied in order to be eligible for the instant asset write-off:

- The asset must be first installed or ready to use between 1 July 2024 and 30 June 2025

- The asset must cost less than $20,000

- The annual aggregated turnover of the business must be less than $10 million.

The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write off multiple assets.

Assets valued over the threshold

Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year thereafter.

Next steps

Small businesses can continue the approach from the previous income year and immediately deduct assets eligible for the instant asset write off.

The provisions that prevent small businesses from re-entering the simplified depreciation regime (lockout rules) for five years if they opt-out will continue to be suspended until 30 June 2025.

Please free to contact our office should you have any queries in relation to these announcements.

2024-2025 Federal Budget Highlights

Sun, 19 May 2024 23:33:49 GMT

The Federal Treasurer, Dr Jim Chalmers, handed down the 2024–25 Federal Budget at 7:30 pm (AEST) on 14 May 2024

Described as a “responsible Budget that helps people under pressure today”, the Treasurer has forecast a second consecutive surplus of $9.3 billion. The main priorities of the government, as reflected in the Budget, are helping with the cost of living, building more housing, investing in skills and education,strengthening Medicare and responsible economic management to help fight inflation.

The key tax measures announced in the Budget include extending the $20,000 instant asset write-off for eligible businesses by 12 months until 30 June 2025, introducing tax incentives for hydrogen production and critical minerals production, strengthening foreign resident CGT rules and penalising multinationals that seek to avoid paying Australian royalty withholding tax.

The Budget also includes various amendments to previously announced measures, as well as a number of income tax measures that have already been enacted prior to the Budget announcement, including:

The revised stage 3 personal income tax cuts (enacted by the Treasury Laws Amendment (Cost of Living Tax Cuts) Act 2024 (Act No 3 of 2024)).
Medicare levy and surcharge threshold changes (enacted by the Treasury Laws Amendment (Cost of Living—Medicare Levy) Act 2024 (Act No 4 of 2024)).
A specific exemption for Australian plantation forestry entities from the new earnings-based rules introduced as part of thin capitalisation reforms (enacted by the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share—Integrity and Transparency) Act 2024 (Act No 23 of 2024)).

These enacted measures have not been discussed in detail in this report. The government anticipates that the tax measures put forward will collectively improve the Budget position by $3.1 billion over a 5-year period to 2027–28.

The full Budget papers and the Treasury ministers’ media releases are available on-line.

The tax, superannuation and social security highlights are set out below.

Income Tax

The instant asset write-off threshold of $20,000 for small businesses applying the simplified depreciation rules will be extended for 12 months until 30 June 2025.
The foreign resident CGT regime will be strengthened for CGT events commencing on or after 1 July 2025.
A critical minerals production tax incentive will be available from 2027–28 to 2040–41 to support downstream refining and processing of critical minerals.
A hydrogen production tax incentive will be available from 2027–28 to 2040–41 to producers of renewable hydrogen.
The minimum length requirements for content and the above-the-line cap of 20% for total qualifying production expenditure for the producer tax offset will be removed.
A new penalty will be introduced from 1 July 2026 for taxpayers who are part of a group with more than $1 billion in annual global turnover that are found to have mischaracterised or undervalued royalty payments.
The Labor government’s 2022–23 Budget measure to deny deductions for payments relating to intangibles held in low- or no-tax jurisdictions is being discontinued.
The start date of a 2023–24 Budget measure to expand the scope of the Pt IVA general anti-avoidance rule will be deferred to income years commencing on or after assent of enabling legislation.
Income tax exemptions for World Rugby and/or related entities for income derived in relation to the Rugby World Cup 2027 (men’s) and Rugby World Cup 2029 (women’s).
Deductible gift recipients list to be updated.

Social Security

Social security deeming rates will be frozen at their current levels for a further 12 months until 30 June 2025.
Carer payment recipients will have greater flexibility with their participation requirements.
Eligibility for the higher rate of Jobseeker payment will be extended to single recipients with a partial capacity to work of zero to 14 hours per week.
The maximum rates of the Commonwealth Rent Assistance will increase by 10% from 20September 2024.
Funding will be provided to implement a social security means test treatment for military invalidity payments affected by the Full Federal Court’s decision of FC of T v Douglas 2020 ATC ¶20-773; [2020] FCAFC 220.
Funding will be provided to enable Australia to enter into a bilateral social security agreement with Uruguay.
Foreign investors will be allowed to purchase established build-to-rent properties with a lower foreign investment fee.

Superannuation

Superannuation will be paid on government-funded paid parental leave (PPL) for parents of babies born or adopted on or after 1 July 2025.
The Fair Entitlements Guarantee Recovery Program will be recalibrated to pursue unpaid superannuation entitlements owed by employers in liquidation or bankruptcy from 1 July 2024.

Tax Administration

The ATO will be given a statutory discretion to not use a taxpayer’s refund to offset old tax debts on hold.
Indexation of the Higher Education Loan Program (and other student loans) debt will be limited to the lower of either the Consumer Price Index or the Wage Price Index, effective from 1 June 2023.
A pilot program of matching income and employment data of migrant workers will be conducted between the Department of Home Affairs and the ATO.
A new ATO compliance taskforce will be established to recover tax revenue lost to fraud while existing compliance programs will be extended.
The ATO will have additional time to notify a taxpayer if it intends to retain a business activity statement refund for further investigation.
The 2019–20 Budget measure “Black Economy — Strengthening the Australian Business Number system” will not proceed.

GST

Refunds of indirect tax (including GST, fuel and alcohol taxes) will be extended under the Indirect Tax Concession Scheme.

Excise and Customs Duty

Tariffs identified as a nuisance across a range of imported goods will be removed from 1 July 2024.
The start dates for certain components of a measure to streamline excise administration for fuel and alcohol announced in the Coalition government’s 2022–23 Budget will be deferred.

Get in touch to discuss how the Budget announcements impact your business.

Economic & Investment Market Update - March 2024

Sun, 19 May 2024 23:07:23 GMT

Portfolio Review for the March 2024 Quarter

Welcome to our Portfolio Review for the March 2024 quarter.

The soft-landing narrative dominated markets over the quarter.
Interest rate deductions been delayed and the magnitude also has now been pared back.
Returns in 2024 are likely to moderate under a soft-landing scenario.

Click below to find out more.

Fringe Benefit Tax at Christmas Time

Sun, 15 Jan 2023 19:46:01 GMT

It is a time of the year when giving is encouraged. As a business owner, you may want to make sure you have all the information available to you, so that you are fully aware of your tax obligations this Christmas.

Christmas parties

The cost of food and drink associated with a Christmas party is exempt from fringe benefits tax (FBT) if they are provided on a working day on your business premises and consumed by current employees. This exemption is only available for employees, not associates.

The provision of a Christmas party held off your business premises may also be exempt from FBT under the minor benefits rule if the cost of the party is less than $300 per employee. The FBT exemption also applies to an associate of your employee, as long as the benefit remains under $300 per employee.

Christmas gifts

Under the minor benefits rule, providing a gift to an employee is also exempt from FBT as long as the value of the gift is less than $300 under the minor benefits rule.

Tax deductibility of a Christmas party

The cost of a Christmas party can only be claimed as a tax deduction if it is subject to FBT. Therefore, if your party is less than $300 per employee, then you cannot claim the cost as a tax deduction.

Inviting clients or customers?

Generally speaking, inviting clients or your customers to a Christmas party is not subject to FBT. However, as the Christmas party is considered to be providing entertainment, the cost of clients attending the party is not income tax deductible.

Here's an Example

You decide to hold a Christmas party for your 60 employees, along with 20 of the employees’ partners and 10 clients. The overall cost of the Christmas party totals $9,000 including gifts.

The cost of the party is not subject to FBT as the cost is considered a minor benefit to your employees and their associates. Also, the cost associated with your clients attending does not attract FBT.
The average cost of your employees and their associates is $100 per person, being under the FBT limit. As no FBT applies, this cost ($8,000) is not tax deductible.
The $1,000 of cost allocated to clients is also not tax deductible as it is considered the provision of entertainment which is specifically denied as a deduction.

Talk to us about your entertainment and gifting plans this Christmas. We can advise on the tax deductability or your obligations.

Make the most of the season by following these simple guidelines

nz-webmanager@wolterskluwer.com (Web Manager) — Fri, 14 May 2021 03:24:30 GMT

The new season is a great reason to make and keep resolutions. Whether it’s eating right or cleaning out the garage, here are some tips for making and keeping resolutions.

Make a list

Lists are great ways to stay on track. Write down some big things you want to accomplish and some smaller things, too.

Check the list regularly

Don’t forget to check in and see how you’re doing. Just because you don’t achieve the big goals right away doesn’t mean you’re not making progress.

Reward yourself

When you succeed in achieving a goal, be it a big one or a small one, make sure to pat yourself on the back.

Think positively

Positive thinking is a major factor in success. So instead of mulling over things that didn’t go quite right, remind yourself of things that did.

Keep in touch with site visitors and boost loyalty

nz-webmanager@wolterskluwer.com (Web Manager) — Fri, 14 May 2021 03:24:30 GMT

There are so many good reasons to communicate with site visitors. Tell them about sales and new products or update them with tips and information.

Here are some reasons to make blogging part of your regular routine.

Blogging is an easy way to engage with site visitors

Writing a blog post is easy once you get the hang of it. Posts don’t need to be long or complicated. Just write about what you know, and do your best to write well.

Show customers your personality

When you write a blog post, you can really let your personality shine through. This can be a great tool for showing your distinct personality.

Blogging is a terrific form of communication

Blogs are a great communication tool. They tend to be longer than social media posts, which gives you plenty of space for sharing insights, handy tips and more.

It’s a great way to support and boost SEO

Search engines like sites that regularly post fresh content, and a blog is a great way of doing this. With relevant metadata for every post so search engines can find your content.

Drive traffic to your site

Every time you add a new post, people who have subscribed to it will have a reason to come back to your site. If the post is a good read, they’ll share it with others, bringing even more traffic!

Blogging is free

Maintaining a blog on your site is absolutely free. You can hire bloggers if you like or assign regularly blogging tasks to everyone in your company.

A natural way to build your brand

A blog is a wonderful way to build your brand’s distinct voice. Write about issues that are related to your industry and your customers.

Tips for writing great posts that increase your site traffic

nz-webmanager@wolterskluwer.com (Web Manager) — Fri, 14 May 2021 03:24:30 GMT

Write about something you know. If you don’t know much about a specific topic that will interest your readers, invite an expert to write about it.

Speak to your audience

You know your audience better than anyone else, so keep them in mind as you write your blog posts. Write about things they care about. If you have a company Facebook page, look here to find topics to write about

Take a few moments to plan your post

Once you have a great idea for a post, write the first draft. Some people like to start with the title and then work on the paragraphs. Other people like to start with subtitles and go from there. Choose the method that works for you.

Don’t forget to add images

Be sure to include a few high-quality images in your blog. Images break up the text and make it more readable. They can also convey emotions or ideas that are hard to put into words.

Edit carefully before posting

Once you’re happy with the text, put it aside for a day or two, and then re-read it. You’ll probably find a few things you want to add, and a couple more that you want to remove. Have a friend or colleague look it over to make sure there are no mistakes. When your post is error-free, set it up in your blog and publish.