2015-16 Federal Budget
The 2015-16 Federal budget was presented to parliament on Tuesday, 12 May 2015 at 7.30pm AEST.
A number of the key tax-related measures announced or referred to in the Treasurer’s speech are below. All such new measures are subject to the necessary legislation being passed by parliament.
- Status of previously announced measures – updated at 22 May 2015: Measures revised in the 2015–16 Budget and those not yet proceeded with (Parliamentary Library)
Small business tax cuts from 1 July 2015:
- The company tax rate for companies with an aggregated annual turnover of less than $2 million will be reduced by 1.5% to 28.5% (the enabling legislation has been now been passed by parliament, see Tax Laws Amendment (Small Business Measures No. 1) Bill 2015)
- individuals with income from an unincorporated business with turnover less than $2 million will receive a tax discount of 5% up to a maximum of $1,000, applied as a tax offset. For progress of the enabling legislation see Tax Laws Amendment (Small Business Measures No. 3) Bill 2015
Instant asset write-off: $20,000
- Small businesses to get immediate deduction for the cost of assets acquired up $20,000 (up from the current $1,000) to be available from 7.30 pm 12 May 2015 until 30 June 2017.
- A small business pool balance of less than $20,000 will also be fully deductible.
The enabling legislation has been passed by parliament, see Tax Laws Amendment (Small Business Measures No. 2) Bill 2015.
Small business start-ups
- will be able to immediately deduct professional costs associated with starting a business rather than writing them off over five years as currently under Sec 40-880 – from 1 July 2015. For progress of the enabling legislation see Tax Laws Amendment (Small Business Measures No. 3) Bill 2015
Small business owners
- to be able to change the legal structure of their business without incurring a CGT liability from 1 July 2016. Currently, CGT roll-over relief can only be accessed by sole traders
and trusts transferring into a company structure. See further: Small Business concessions
FBT small business exemption expanded
- for portable electronic devices for work purposes to include more than one device performing a similar function from 1 April 2016. This exemption refers to devices such as laptop computers, tablets and phablets. Before the change, there is an exemption limit of one portable electronic device per FBT year performing a similar function. For progress of the enabling legislation see Tax Laws Amendment (Small Business Measures No. 3) Bill 2015
The “Netflix tax”
- Offshore supplies of services & intangibles to Australian consumers subject to GST from 1 July 2017
- Anti-avoidance rules in Part IVA to be tightened in order to deal with tax avoidance by multinational groups with turnover exceeding $1 billion.
- the new rules will apply to tax benefits arising on or after 1 January 2016, from both existing or new arrangements
For a summary and explanation see:
- “Australia Introduces a Google Tax After All” – RSM Bird Cameron
Work-related car expense deductions
- to be changed from the 2015/16 income year – 12 per cent of original value method, and one-third of actual expenses incurred calculation methods are to be discontinued and the cents-per km rate is to be set at a flat average rate of 66 cents per kilometre, regardless of vehicle size.
- Work-related car expenses – updating motor vehicle expense claims
- Claiming work related car expenses.
Medicare levy low-income thresholds
- CPI adjusted for 2014/15 -see Medicare Levy
- to receive accelerated deductions for water facilities (100%), fodder storage (3 years) and fencing (100%) from 1 July 2016.
On 27 May 2015, the Treasurer announced that the commencement date for these measures will be brought forward to 12 May 2015. See the Treasurer’s media release. The enabling legislation giving effect to these measures has now been passed by parliament, see Tax Laws Amendment (Small Business Measures No. 2) Bill 2015.
- Helping Australian farmers prepare for and manage drought
- Federal Treasurer considers fast-tracking drought assistance measures – ABC World Today
The “backpacker tax” – expansion of tax on temporary resident visa-holders
- [update 30 November 2016] The government negotiated to reduce the proposed marginal 32.5% tax rate on working holiday maker visa holders (the backpacker tax) to 15% for incomes up to $37,000 from 1 January 2017 under a package of measures before parliament. The application charge for working holiday maker visas will also be reduced by $50 to $390, however the tax on working holiday makers’ superannuation payments when they leave Australia will be increased to 95%. The departure tax (Passenger Movement Charge) is also up by $5. See: Treasurer’s media release and progress of legislation Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016 (No 2), Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016 and Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2016
- [update 17 May 2016] The government has announced that the implementation of the backpacker tax will delayed until 1 January 2017. At the same time the Government has announced “a comprehensive review” of working holiday makers as a source of labour and related tax, economic and regulatory issues. The review is due to report back by mid-October 2016. See further details of the announcement and enquiry terms of reference here.
- Working holiday visitors are to be treated as non-residents regardless of their period of stay, and so will lose the tax free threshold. This is to take effect from 1 July 2016, and will result in a minimum flat tax rate of 32.5% (on the current scale). Currently such taxpayers are treated as resident if they satisfy the tax residency rules, generally if in Australia for at least 183 days. See “backpacker tax” commentary and further details here.
FBT Not For Profits
- from 1 April 2016 – a grossed-up cap of $5,000 will apply for salary-sacrificed meal entertainment and entertainment facility leasing benefits for employees of not-for-profits, and any excess to be counted in calculating the existing FBT exemption or rebate cap. All use of meal entertainment benefits will be reportable.
- Tightening fringe benefit tax on not-for-profit organisations – Parliamentary Library
- FBT generally: Fringe Benefits Tax
Luxury car tax
- Public museums and public art galleries approved as a deductible gift recipient will be allowed to acquire cars free of luxury car tax, to take effect from the date of the measure becoming law. See LCT generally: Luxury Car Tax
The Family Tax Benefit:
- The FTB Part A large family supplement is to cease from 1 July 2016.
- From 1 January 2016, families will only be able to receive Family Tax Benefit Part A for six weeks in a 12-month period while they are overseas. See FTB generally: Family Tax Benefit
Access to superannuation
- Terminally ill patients will get earlier tax-free access to their superannuation with effect from 1 July 2015 due to a change of the pre-requisite condition to likely death within 2 years (currently 12 months).
- See also: Access to superannuation.
Parental Leave Pay scheme tightened
- From 1 July 2016, access to the government Parental Leave Pay scheme will be denied when employer-provided parental leave entitlement support is in place in order to prevent so-called “double-dipping”.
- See also Paid Parental Leave.
Pension deeming thresholds
- previously announced measures will not be proceeding.
- As a result, the pension income test free areas and deeming thresholds will continue to be indexed annually by the Consumer Price Index. See also Centrelink payment rates
Major changes to childcare system – see more here
Zone tax offset
- “fly-in fly-out” and “drive-in drive-out” workers will be excluded from claiming the rebate where their normal residence is not within a “zone” – to take effect from 1 July 2015.
Income tax exemption removed
- the exemption for government employees who earn income while delivering Official Development Assistance overseas for more than 90 continuous days will be removed from 1 July 2016
Pensions entitlements tests
- The Minister for Social Services has foreshadowed changes to pension entitlements tests, including the assets test, “in order to improve fairness and protect the budget position”.
- The asset free thresholds and asset taper for pensions are to be adjusted from 1 January 2017. Pensioners with modest assets will receive more pension, and those with more substantial assets will need to rely more on their own means.
- The Government will not proceed with indexation of pensions by CPI only. Pensions will continue to increase twice a year with the higher of inflation or wages.
Budget Summaries and References 2015:
- Budget papers (official site) – budget.gov.au
- CCH-Deloitte 2015 budget summary and report
- 2015-16 Federal Budget – “Prepare for repair” – PWC
Pre-budget commentary and announcements
|Budget 2015: What we know so far – ABC Online|
|Updating work-related car expenses – the Assistant Treasurer has flagged the following changes to motor vehicle tax deduction claims:|
| The Treasurer has confirmed the proposed introduction of two new major tax initiatives:|
|Bank deposit tax set to be announced in tomorrow’s federal budget – ABC World Today|
|The government announces major changes to childcare system – see: The changes explained – ABC|
|The Minister for Social Services has foreshadowed changes to pension entitlements tests, including the assets test, in order to improve fairness and protect the budget position. See media release.|
|“Federal budget 2015: GST on Netflix and more on the way” – the upcoming budget expected to expand the GST to imports of services such as Netflix and downloaded books, music, videos and software – article from the Canberra Times.|
|Small business incentives: From July 2016, new start-ups will be able to immediately deduct professional costs associated with starting a business rather than writing them off over five years, and Small business owners will also be able to change the legal structure of their business without incurring a CGT liability -see Small Business Minister’s media release|
|Graduates working overseas will have to pay HECS: Pyne – The Australian and New plan to recover hecs debt from aussies living abroad – Minister’s media release|
|Nanny subsidy – childcare package pilot program announced – ABC AM and media release|
|Labor considering negative gearing as an election issue – ABC AM|
|Labor’s plan for fair, sustainable superannuation –Bill Shorten|
|In an address to The Australian Chamber of Commerce on 15 April 2015, the Prime Minister confirmed:|
|Iron ore price falling, but govt not chasing revenue with new taxes: Hockey – ABC AM|
|Joe Hockey flags expanding GST to internet downloads – ABC AM|
|Government signals it may back plan to wind-back payments for wealthiest retirees – ABC News report|
|2015 Intergenerational Report|
|The 2015 Intergenerational Report – A snapshot – PWC|
|ABC online: Intergenerational Report predicts booming and ageing Australian population|
|The Federal Treasurer Joe Hockey’s invitation for pre-Budget submissions regarding priorities for 2015-16 had a deadline of 6 February 2015.|
This page was last modified on 1 Sept 2017