Tax tips for the new financial year

[ With a new financial year comes changes to tax rules for small to medium enterprises [and the people behind them]. ]
by Michael Garrone Published

Outlined below are key topics you need to be aware of moving forward.

[INDIVIDUAL TAX RATES]

While there is no change to the individual income tax rates for the 2014/15 year, the effective top marginal tax rate has increased from 46.5% to 49% with an increase to the Medicare levy and the introduction of the temporary budget repair levy. The individual income tax rates (excluding these levies) will remain as follows:

[MEDICARE LEVY]

The Medicare levy has increased from 1.5% to 2% for the 2014/15 year to fund the National Disability Insurance Scheme. This levy is payable by most individuals regardless of whether they hold private hospital cover.

[TEMPORARY BUDGET REPAIR LEVY]

The temporary budget repair levy also comes into effect from 1 July 2014. This mean individuals earning over $180,000 will pay an additional 2% tax on the amount of their taxable income that exceeds $180,000. For a person with a taxable income of $190,000, they will pay a levy of $200 representing 2% of $10,000 ($190,000 minus $180,000).

[PRIVATE HEALTH REBATE]

The thresholds for the private health insurance rebate and Medicare levy surcharge changed from 1 July 2014. The thresholds for the 2014/15 year are as follows:

[SUPERANNUATION CONTRIBUTION CAPS]

From 1 July 2014 the superannuation contribution caps have also changed. This will allow you to get more money into superannuation. The new contribution caps for the 2014/2015 financial year are as follows:

[COMPULSORY SUPERANNUATION FOR EMPLOYEES]

As part of the government’s ongoing plan to increase the compulsory superannuation rates for employees the superannuation guarantee rate has increased from 9.25% to 9.5% from 1 July 2014.

[CHANGES TO RULES FOR DEPRECIATING ASSETS]

For small businesses with a turnover less than $2 million there remains significant uncertainty regarding the rules for immediately deducting low cost assets. Currently a small business entity can claim an outright tax deduction for assets costing less than $6,500. It is proposed to reduce this threshold to $1,000 effective from 1 January 2014. This legislation is linked with the repeal of the mining tax which is yet to clear the Senate.

The legislation also repeals the accelerated depreciation rules that apply to motor vehicles allowing a small business to deduct the first $5,000 immediately. The proposed law will also be effective for vehicles purchased from 1 January 2014.

[LODGEMENT OBLIGATIONS FOR EMPLOYERS]

As usual July is a busy time for businesses wrapping up the previous financial year. Please be aware of the following deadlines which are fast approaching:

14 July 2014 – PAYG Payment summaries to be provided to employees

21 July 2014 – Taxable payments annual report to be lodged with the ATO for those in the building and construction industry

21 July 2014 – Payroll tax annual return to be lodged with OSR

28 July 2014 – June quarter superannuation payments due*

14 August 2014 – PAYG payment summary statement to be lodged with ATO

*Note: Late payment of superannuation will cause these contributions to become non-deductible and payment must then be made to the ATO using a superannuation guarantee charge statement.

Michael Garrone
read more by Michael Garrone

Michael is our Tax Specialist Director as well as the head of our business advisory niches of Building and Construction and Property.

With Michael's extensive experience and a real interest in these niche areas he is able to provide practical business and tax advice that is unique to the Building and Construction and Property industries. His tailored advice helps guide these businesses through start-up phase to succession and sale. Michael has many years’ experience in solving complex problems involving corporate tax, restructures, international taxation, Capital Gains Tax and GST. 

Michael also has a strong background in self-managed superannuation and is an authorised representative of superannuationDEPOT. In this area Michael provides strategic advice on SMSF structures and in particular limited recourse borrowing arrangements. Through this diverse experience Michael has developed expertise within a wide range of industries including building and construction, property, professional services (legal, engineering & finance), technology and software and manufacturing.

Michael Garrone is an authorised representative [No. 1240832] of Hunter Green Pty Ltd AFSL 225962. Your Adviser may offer you services through Depot Superannuation Pty Ltd which is a separate business. Although the same Adviser may offer you services under the above businesses, each business is solely and separately responsible for the advice they each provide. In particular, Hunter Green is only responsible for the financial planning services provided by Michael Garrone.

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