Michelle Maynard, Partner at Carbon Accountants and Business Consultants, discusses the recent tax changes which the Government has promised and only half delivered, in the lead-up to the Federal Election: the Small Business Instant Asset Write-Off and the Superannuation Amnesty.
Over the past year there have been two major tax changes announced which I have been keeping a close eye on – both from a client perspective, but also a timing perspective. With the Federal Election looming, there was a chance that time would run out and these wouldn’t become law at all – even though they have been widely publicised.
But, as we have learnt in the past week, one of these has passed, and one will not. Below, I discuss the Small Business Instant Asset Write-Off and the Superannuation Amnesty.
$25,000 Small Business Instant Asset Write-off
In January, it was announce that the Small Business Instant Asset Write-Off would be increased to $25,000 (currently $20,000) and be applicable until 30 June 2020. Prime Minister Scott Morrison announced that the new law would apply from 29 January 2019, when passed, and apply to all businesses with turnover under $10 million.
While the legislation was introduced into Parliament on 13 February 2019, it was passed on 4 April 2019 – with 18 Government Amendments post the Federal Budget Announcements
As a result, for the 2019 tax year, small and medium businesses ( up to $50 million turnover) will have three tiers of asset thresholds to consider to determine if they are fully depreciable in 2019.
- From 1 July 2018 to 29 January 2019 assets under $20,000 first used or installed are fully deductible.
- From 29 January 2019 to 2 April 2019 assets under $25,000 first used or installed are fully deductible.
- From 2 April 2019 to 30 June 2020 assets under $30,000 first used or installed are fully deductible.
From 1 July 2020 the threshold will revert back to $1,000 for small businesses only. The above has passed both houses and is awaiting royal assent. As it stand this will be law.
In May 2018 the Government announce a 12 month amnesty for Employers who hadn’t paid the Super Guarantee obligations for their employees. If passed, the amnesty would run from 24 May 2018 to 23 May 2019.
The amnesty would allow employers to pay their outstanding superannuation debts, without penalty or interest. When it was announced, the Government advised Employers that once the amnesty ends, higher penalties would be applied (a minimum of 50 per cent on top of the Superannuation Guarantee owed).
Again this measure is not yet passed. Unlike the Small Business Instant Asset Write Off, the amnesty does not have bipartisan support. This makes the likelihood of the amnesty actually passing into law even less likely.
The ATO website warns that “Until law giving effect to the proposed Superannuation Guarantee Amnesty is enacted, we will continue to apply the existing law, including the application of the mandatory administration component ($20 per employee per period) to SG charge statements lodged by employers.” However, industry insiders are advising that the ATO are using their discretion to waive the Part 7 penalty in full for employers making a voluntary disclosure. This Part 7 penalty can be up to 200% of the Superannuation Guarantee outstanding.
The time period for this legislation how now lapsed meaning the Superannuation Amnesty will never be law, unless reintroduced. Those who did make disclosures during the proposed amnesty timeframe may be granted penalty and interest remissions if the ATO is approached. Something to keep in mind for our clients.
Michelle Maynard partnered with Carbon in 2017, bringing a wealth of experience in accounting and bookkeeping. Her extended suite of services covers everything from tax accounting, planning and estimates, to cloud integration, payroll and SMSF. Michelle started her career as a cadet in the Australian Taxation Office, then as a graduate at PwC. Before joining Carbon, she was a manager at PKF, bringing a wealth of knowledge and experience to the team at Carbon. Michelle specialises in providing tax and accounting advice to SMEs and HNWIs and their family groups, working to achieve the most effective strategies for them, both financially, tax effectively, and to help achieve their desired lifestyle. You can contact Michelle at [email protected]or connect via LinkedIn