Tax changes from 1 July relevant to small business

Happy new financial year. There are a number of changes relevant to small and medium size businesses that kick off on 1 July 2015. The long awaited 1.5% company tax cut officially comes into effect. Business owners also need to be aware of the 2.5% increase in minimum wage and the need to pay super contributions electronically.

 

Here’s Consolid8’s guide to all the changes you need to be aware of from 1 July

 

1. Small Business Tax Cut

The 1.5% company tax cut for incorporated small businesses with an annual turnover of less than $2million comes into effect from 1 July.

The $2million limit is aggregated, so if you have multiple businesses we recommend you contact our Tax and Business Advice team so we can work out the best corporate structure to optimise your tax position.

When you get to the end of this quarter we suggest reviewing whether you are putting away the right amount for PAYG Instalments.

 

2. Tax Discount for Unincorporated Small Businesses

There is also a 5% tax discount for small businesses that are not incorporated, capped at $1000.

It depends on how much profit you are making as to whether you will save more as a company rather than an unincorporated company. If you are unsure of the benefits of being incorporated or an unincorporated business give our Tax and Business Advice team a call.

 

3. Minimum Wage Increase

From 1 July the minimum wage will go up by 2.5% or the equivalent of $16 per week. This decision by the Fair Work Commission sees the minimum wage sit at $656.90 per week, or $17.29 per hour.

All business owners need to take this increase seriously. We recommend you review the relevant award rates for your industry and ensure staff pay rates are above the newly set minimum wage rate. If you are paying in excess of these rates right now there is nothing you need to do.

 

4. SuperStream Begins

We’ve been talking about SuperStream for several years now. The 1 July 2015 marks the start of SuperStream for all businesses.

SuperStream is a compulsory change for all employers across the country, with businesses now required to make super contributions electronically in a specific format.

This change is designed to save small business time, cut red tape and reduce onerous paperwork. Consolid8 clients using our Corporate Payroll service have already transitioned to SuperStream.

 

5. Claiming Car Expenses

As many Consolid8 clients claim car expenses, we also need to point out the cents per kilometre you can claim for car expenses has dropped to 66c from 1 July. Previously it depended on the size of your engine.

In some instances this is a drop of up to 11c a kilometre, so it may be more advantageous to keep a logbook this year, as you might be able to make a much higher claim. You will also need to keep a record of running costs such as fuel, repairs, rego and insurances.

 

6. Net Medical Expenses Tax Offset

Sadly, the net medical expenses tax offset has been completely phased out from 1 July 2015. This refers to the medical expenses you have paid less any refunds you got (or could get) from Medicare or a private health insurer. The last opportunity clients have to claim this benefit is in their 2014/2015 tax return and only if you had an eligible claim in 2013/2014.

 

If you have any questions about the changes to tax legislation and how these impact on your business give our Tax and Business Advice team a call on 1300 222 353