No big surprises in the MYEFO, but a few changes to watch for
This week the Government released the Mid-Year Economic and Fiscal Outlook 2015-16 estimating a budget deficit of $37.4bn which is up from the $35.1bn deficit forecast in the May 2015 Budget. The write downs caused by falling commodity prices, declining terms of trade and weaker global growth were largely expected with little in the announcement to materially affect small to medium business owners, however our farmers receive some welcome relaxation on Farm Management Deposits. A key objective of the government is to drive productivity and competitiveness in the Australian economy through innovation and technical advances, early signs of how this will be supported is detailed in the Innovation Statement.
Some of the proposals announced in MYEFO worthy of a watchful eye include:
Single Touch Payroll Reporting - tax offset for SMEs - The Government will simplify the reporting by employers of their PAYG withholding obligations and superannuation contributions by progressively implementing Single Touch Payroll (STP). The proposal will be phased in from January 2017 with a voluntary pilot focusing on SMEs - from 1 July 2018, employers with 20 or more employees will be required to use STP enabled software for reporting to the ATO. To assist small business, the Government will provide businesses with a turnover of less than $2m with a $100 non-refundable tax offset for expenditure on Standard Business Reporting enabled software. This offset will apply from 1 July 2017, and will be available for software purchases or subscriptions made in the 2017-18 financial year only.
ATO improvements to data and analytics infrastructure - The Government will provide $61.9m over 4 years (including capital of $12.2m) to the ATO to upgrade its data analytics capability. Compliance activities enabled by improved analytics are estimated to raise additional revenue of $222m over the forward estimates period.
Third party reporting and data matching - delayed start - The Government will delay the start date of 3 elements of the measure “Tax compliance - improving compliance through third party reporting and data matching” announced in the 2013-14 Budget. The 3 elements to be delayed include reporting on government grants and payments, transfers of shares and units and business transactions through merchant payment systems. The fourth element, transfers of real property, will start on 1 July 2016, as announced. Reporting by ASIC on shares and units will also start on 1 July 2016.
Tax treatment of biodiesel - extension of phase-in for new arrangements - The Government has amended the 2014-15 Budget measure “Taxation treatment of biodiesel – modification”. The excise rate applying to domestically produced biodiesel will now be gradually increased from 1 July 2016 until 1 July 2030 when the applicable excise rate will be approximately 50% of the full excise rate applying to petrol and diesel. The Government's amendments provide a longer phase-in to the changes to the taxation treatment of biodiesel, providing more time for the domestic biodiesel industry to adjust.
Farm Management Deposits conditions are relaxed – Farm Management Deposits are a risk management tool to help primary producers deal with uneven income between years, which frequently occurs as a result of weather variations, the occurrence of natural disasters and changing market conditions. From 1 July 2016 farmers will be permitted to use the FMDs as loan offsets for primary production business loans, the deposit limit will double to $800,000, they will be permitted early access in times of drought and to re-access tax averaging after they opt out. Review our article Great news for Farmers with changes to Farm Management Deposits in MYEFO for further details on the relaxation of FMD conditions.
Please note that this publication is intended to provide a general summary and should not be relied upon as a substitute for personal advice.