News

Changes to the super guarantee and upper age limit

From 1 July 2013 the super guarantee increases to 9.25% and the upper age limit has been removed. This means employers may need to make super guarantee payments for eligible employees aged 70 years and over.

If you are an employer, you will need to ensure that your payroll and accounting system applies the appropriate increase in the super guarantee rate. Currently the super guarantee rate will increase every year until it reaches 12% in 2019, however the Coalition has announced that if they win the federal election, they will defer any further increases for two years.

If you are an employee salary sacrificing to make additional superannuation contributions, ensure you take into account the increased super guarantee rate; don't exceed the $25,000 contributions cap.

For more information about these changes talk to your Chartered Accountant.

Medicare levy increase affects small business

The Medicare levy increase – from 1.5% to 2% – will effectively bring the top marginal tax rate to 47%. This will not only impact individual taxpayers but also small businesses. A number of tax laws that businesses regularly comply with apply the top marginal income rate as a penalty rate of tax.

As a result, the following common tax items will be subject to tax of 47%, up from the previous 46.5%:

  • Fringe Benefits Tax (FBT)
  • TFN and ABN Withholding Tax
  • Family Trust Distributions Tax
  • Trusts, where Section 99A of the Income Tax Assessment Act 1936 (Cwlth) applies to retained income
  • Excess non-concessional contributions to super (with tax on excess concessional contributions to increase to 32%)

Changes to simpler depreciation rules

The small business instant asset write-off threshold has been increased from $1,000 to $6,500 for the 2012-13 income year. As a result, small businesses can claim an accelerated initial deduction for motor vehicles acquired in 2012-13 and in subsequent years.

This means the long life small business pool and the general small business pool have been consolidated into a single pool to be written off at one rate.

These amendments only apply to small businesses that have an aggregated turnover of less than $2 million. The aggregated turnover includes the annual turnover of the small business and the annual turnovers of any connected or affiliated businesses.

The depreciating asset can be written off at the end of the income year when the business either:

  • Starts to use it for a taxable purpose; or
  • Has it installed ready for use for a taxable purpose.

An accelerated deduction can also be claimed for motor vehicles costing $6,500 or more under the same provisions. The cost of the motor vehicle is added to the general pool but unlike other assets, the deduction is $5,000 plus 15% of the remaining amount.

For example if you purchase a vehicle only used for business purposes for $12,000 in the 2012-13 income year you can claim the following:

$5000 + 15% (12,000 – 5,000) = $6,050

If the motor vehicle costs less than $6,500 it can be immediately written off.

For more information on these depreciation rule changes talk to your Chartered Accountant.

RECENT NEWS

Changes to the super guarantee and upper age limit

From 1 July 2013 the super guarantee increases to 9.25% and the upper age limit has been removed. This means employers may need to make super guarantee payments for...

Click here for more...

Medicare levy increase affects small business

The Medicare levy increase – from 1.5% to 2% – will effectively bring the top marginal tax rate to 47%. This will not only impact...

Click here for more...

Changes to simpler depreciation rules

The small business instant asset write-off threshold has been increased from $1,000 to $6,500 for the 2012-13 income year. As a result, small businesses can claim an accelerated initial deduction...

Click here for more...
 

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