That said, there was still plenty for Budget aficionados to chew over once Hockey finished giving his Budget address in the House of Representatives. Nowhere was this more evident than in financial advice and small business, with important changes to tax, superannuation, social security and family assistance and corporate tax.

On the income tax front, personal marginal tax rates did not change. But motor vehicle expense deductions did, with important changes to how they are calculated.

Fringe Benefits Tax also changed for employees in the not-for-profit sector. From 1 April 2016, a new separate single grossed-up cap of $5000 will apply for salary-sacrificed meal entertainment benefits for these employees.

For those not complying with their tax obligations, penalty units will jump $10 to $180 each from 31 July 2015. So be warned.

In superannuation, there was a welcome announcement with amendments to the conditions where someone terminally ill can access their super. Most significantly, there is a proposal to extend the time limit from one year to two.

In social security and family assistance, the eligibility conditions for the Parental Leave Pay scheme will be tightened. In particular, it will prevent some parents from claiming parental leave payments from their employer and the Government (although the Government no doubt regrets claiming these people were abusing the system when two ministers were found to be recipients of both schemes).

The Government also announced a comprehensive package of child care reforms with the goal to make the system simpler, more affordable, flexible and accessible. The reforms include a new Child Care Subsidy and eligibility will be based on activity and means tests.

The other major change in social security related to the age pension where the Government will make significant changes to the means test used to determine eligibility. The changes, proposed to take effect from 1 January 2017, will result in some people losing access to some of their full or part pension. In addition, the social security means testing of certain defined benefit pensions will be amended to impose a cap on the deduction amount available under the income test.

The best news, however, was left for small business. Starting in 2016-17, there will be capital gains tax (CGT) roll-over relief for businesses with annual turnover of less than $2 million. These same companies also will receive a tax cut of 1.5 per cent, while those exceeding the $2 million threshold will remain at the current 30% tax rate.

Two other benefits given the small end of town were immediate deductions for a number of professional expenses associated with starting a new business and expanded accelerated depreciation for small businesses, meaning those businesses with an annual turnover of less than $2 million being able to immediately deduct the cost of assets worth less than $20,000. Expect to see a splurge in car sales.

This tax time look out for changes to:

• Motor vehicle expense deductions
• Fringe Benefits Tax for not-for-profits
• Penalties for non-compliance to tax obligations
• Superannuation access for terminally ill
• Parental Leave Pay
• Child Care Subsidy
• Age Pension means test
• Small business CGT relief and tax cut

 

Maximising the benefits of negative gearing – Simon Byers, Partner of Highview’s Prahran Office