January 20, 2012
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Andrew Lovett

Question:

Small business depreciation benefits: Conditional on mining and carbon taxes

Answer:

Recent changes are outlined below:

July 1, 2022

  • Loss carry back for eligible companies extended to cover 2023 income year.
  • Professional firm profits diverted to the professional's spouse or other associates to be reviewed under new Tax Office guidance.
  • Corporate collective investment vehicle legislative regime introduced.
  • Temporary full expensing of depreciating assets extended to include 2023 income year.
  • Depreciable assets of a company joining a tax consolidation group have tax costs setting rules modified for assets depreciated under temporary full expensing rules.

December 9, 2021

  • Reduced Pandemic leave disaster payment of $750 per week made available through to 30 June 2022.

August 5, 2021

  • COVID-19 Disaster Payments are non-assessable non-exempt income in 2021 income year and later. Payments phasing out as vaccination rates increase.

July 1, 2021

  • New Investment Engagement Service launched for businesses planning significant new investments in Australia.
  • Tax Office small business independent review service made permanent for businesses with turnover < $10m, for income tax, GST, exercise, luxury car tax, wine equalisation tax and fuel tax credits. Requested  before amended assessment issued.
  • Small business income tax offset for individuals increased to provide a reduction of 16% for a tax payable up to $1,000.
  • Self-managed superannuation funds can now have six members, increased from four members previously.

July 1, 2021

  • Some COVID -19 state and territory business grants received by small and medium enterprises are non-assessable, non-exempt income for 2021 and 2022 income years.
  • Certain state, territory and local government financial support for individuals and businesses suffering COVID-19 impacts made exempt where businesses have turnover less than $50 million and only in eligible programs.

March 31, 2021

  • JobKeeper payments scheme ended.

October 5, 2020

  • Boosting apprenticeship commencements subsidy (up to 50% of apprentice's wages) is assessable income.

June 4, 2020

  • Homebuilder grant for new home or substantial renovation construction is not subject to income tax.

April 1, 2020

  • COVID-19 cash flow boost payments are not subject to income tax

A Bill is before Parliament to increase the immediate small business asset write-off from $1,000 to $6,500 in two steps. The first step to $5,000 is conditional on the Minerals Resource Rent Tax receiving Royal Assent and the second step to $6,500 was conditional on the Clean Energy Bill receiving Royal Assent.

Subject to those Bills, the change will commence from July 2012 for businesses with a turnover less then $2 million.Currently small businesses can immediately write-off assets under $1,000 and then also apply more expensive assets to either the general pool (depreciated at 30% a year) or the long life pool.

As part of this legislation, the long life pool will also be eliminated leaving assets that cost $6,500 or more, all allocated to the general pool.

In the year of purchase, those more expensive assets can be depreciated at 15% on a diminishing value basis and at 30% each year thereafter.

Given that the Clean Energy Bill has been passed by both Houses, this legislation is now only dependant on a deal between the Independents and the Government on the mining tax.

Tax Laws Amendment (Stronger, Fairer, Simpler and Other Measures) Bill 2011, WTB 1741

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