Australia: 2015 Budget Summary
The 2015/16 Budget moves away from the austerity measures ushered in by the 2014 budget and instead focuses on tax relief for small businesses and extra childcare benefits for families. Commentators view the budget as a bit of a crowd pleaser targeted at political survival (following the reaction to last year's budget). We have grouped below some of the main outcomes:
- Small business ( those with revenue of less than $2M per year) will benefit from a full tax deduction of up to $20K per asset purchased , with no limits on the number of assets this can be applied to.
- Small businesses will also benefit from a corporate tax cut of 1.5% taking the rate of tax to 28.5%.
- Small business will also have Fringe Benefits tax abolished on the portable electronic devices that they supply to their employees.
- Car expenses- From 1 July 2015 there will be only 2 available income tax deduction methods. The '12% of original value' method, and the 'one-third of actual expenses method' will be abolished, leaving only the 'flat rate' cents per kilometer' method and 'logbook method'. With regards to the cents per kilometer method a fixed rate of 66 cents per KM will be applied - regardless of engine size.
- Large multinational companies (MCNs), those with global annual revenue exceeding $1B, and claiming not to have a local PE will have to satisfy a stringent test in order to avoid local tax - this will require the submission of a detailed country by country report, a file on the MCNs business including org charts and transfer pricing policies , and a local file providing details on the local taxpayers intercompany transactions. In addition to this the ATO will receive additional funding to the tune of $87.6 million to further develop its International Structuring and Profit Shifting reviews ( ISAPS) program.
- GST on inbound digital sales: effective from 1 July 2017 GST will apply to imports of digital products and services by consumers.
- Employee share schemes - reference was made to the legislation currently before parliament which will move the tax point from grant to exercise on grants made from 1 July 2015.
Summary - good news for businesses satisfying the small businesses definition ....less so for those considered an MCN!