Another financial year is in the books, and it’s time to review what happened over the past year and what to expect in the coming year with our annual Tax Newsletter.
The Government took a gentle approach to tax in the budget this year – after the shock and awe effect of the 2014 budget (although not many changes actually affected tax), they weren’t going to make the same mistake twice. There is very little change across the board – including in tax. We have elaborated in our newsletter on some of the main changes.
There are very few clients who will be able to claim the medical expenses tax offset, as it winds down to an eventual phase-out by 2018/19. Only taxpayers who received some of this benefit in 2012/13 and 2013/14 can claim the offset in 2015 – others will be restricted to a much smaller variety of expenses for items such as disability aids, attendant care and aged care.
Small business has received some breaks in the form of a reduced tax rate and an immediate write-off for qualifying assets that cost up to $20,000. These measures take effect from 12 May 2015 up until June 2017. It is unfortunate that the ATO definition of a small business restricts these entities to those who have turnovers of less than two million per year but will assist to ease financial stress in some businesses.
While the majority of tax change has been quite positive, the ATO have decided to overhaul the claiming of motor vehicle expenses. The number of methods that can be used to claim these costs will be limited and the cents per kilometre will be standardised to one rate only – which is considerably less than what is able to be claimed at present. Considering ongoing rising fuel costs (and other running expenses) and the variety of engine sizes and fuel efficiencies of vehicles in general, this decision is unfortunate.
There are two tax offsets that have been scrapped in the Budget from the 2015 year onwards that will affect quite a few taxpayers. These are the Dependant Spouse Tax Offset and the Mature Aged Workers Tax Offset. These offsets were already stringently means tested so this decision will mainly impact low-income taxpayers, quite an unfair outcome.
To read our 2014/2015 Annual Tax Newletter in full, click here
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