Budget 2015: Overview

Last night Treasurer Joe Hockey presented his 2015/16 Budget, which on close analysis, appears to be highly targeted and seeks to keep change within community tolerance levels.

Like all budgets, there are winners and losers. Most of the spending measures are targeting productivity gains, including tax cuts and accelerated depreciation for small businesses.

There are also significant changes to the child card and family tax benefits, plus increases to the asset test thresholds and withdrawal rate at which pensions are reduced once the threshold is exceeded.

If you require further clarification on how this may impact your circumstances please contact PPT on (03) 5331 3711.

Key Highlights:

Accelerated depreciation across multiple areas

• Micro business – immediate deductibility from Budget night for any assets purchased and used or installed and ready to use by 30 June 2017 that cost less than $20,000
• Start ups – immediate deductibility for professional expenses – cost of lawyers and accountants to get a business up and running
• Farmers – immediate deductibility for fencing and water facilities

Tax cuts for small business (under $2m) from 1 July 2015

• 1.5% company tax reduction
• 5% tax discount for unincorporated small businesses

GST on digital supplies

• Similar GST treatment applied to supplies of digital products to Australian consumers – including consulting and professional services – regardless of whether they are supplied by a local or foreign supplier

Individuals

• Changes to work related deductions for car expenses – 12% of original value and one third of actual cost methods removed and simplification of cents per kilometre method

FBT changes

• Changes to salary sacrificed meal entertainment for not for profits
• Expansion of FBT exemption for work related electronic devices provided by small businesses

Multinationals targeted

• Changes to Part IVA target around 30 global companies with revenue in excess of $1bn

Accessing government benefits

• Changes to how superannuants’ income counted for social security
• Child care shake up – Collapses three current eligibility tests with one means and activity test
• Asset test changes mean 91,000 pensioners no longer qualify and 235,000 will have pension reduced
• ‘Double dipping’ Government and employer paid parental leave stopped

The Economy in Brief

• Deficit of $35.1 bn in 2015/2016 reducing to $6.9 bn by 2018/2019
• Real GDP expected to grow by a modest 2.75% in 2015/2016, which is 0.25% slower than expected 12 months ago.
  • Stronger non-mining business investment expected to drive growth in 2016/2017 to 3.25%
• Unemployment rate currently better than predicted at 6.25% but expected higher in 2015/2016 before falling again.
• Tax receipts downgraded by $52 billion since 2014 Budget – $20bn a result of the iron ore spot price halving:
  • Iron ore investments and exports directly contributed 15% to economic growth over the last decade
  • Australia accounts for 1/3 or world iron ore production
• Australia’s major trading partners are expected to grow by 4.5% in 2015 and 2016.
• Total exports expected to increase by 5% in 2015/2016 and 6.5% in 2016/2017
• Non-mining business investment has increased but remains uncommitted

SOURCE: Knowledge Shop

To discuss how this may impact your circumstances please contact PPT on (03) 5331 3711.

DISCLAIMER: The material and contents provided in this publication are informative in nature only.  It is not intended to be advice and you should not act specifically on the basis of this information alone.  If expert assistance is required, professional advice should be obtained.