Talking Cents

Small businesses accountants take note of more recent Government changes

During the GFC the Federal Labor Government implemented a number of economic changes in an attempt to stimulate the economy and keep the economy from falling into recession. Now that the election has been run and won, the Abbott Government is now wading its way through these Labor policies and making changes in some areas in order to bring us closer to a budget surplus. The most significant change made to date is the repeal of the Mining Mineral Resources Rent (MRRT) tax that will take effect from 1 July 2014. As a result of this reduction in Government income collections the Government has also made changes on the outgoings side to compensate.

Small business owners must be made aware that in order to take advantage of the previous Government’s accelerated depreciation rules, assets must be bought and installed ready for use by 31 December 2013. The instant asset write-off amount of $6,500.00 will reduce back down to $1,000.00 on 1 January 2014.

Further, the $5,000.00 immediate deduction for small businesses that acquire motor vehicles will also cease from 1 January 2014. Standard depreciation rules for motor vehicles bought after this period will apply.

Any small business owners looking to acquire new equipment or motor vehicles for their business need to bring forward their capital expenditure to take place before 31 December or they will lose out on receiving a greater income tax benefit in the 2013/2014 financial year.

Also impacting on small businesses for future years is a slow-down in the rate of increase to the Superannuation Guarantee charge percentage. The rate will remain at 9.25% until 30 June 2016. The rate will not hit a full 12% until 1 July 2021.

For any small business owners, Sydney, Melbourne or across the country, impacted by these changes, please note that definition of a small business in this context is a business with gross annual turnover for this financial year not exceeding $2 million per annum.