The Minerals Resource Rent Tax Bill 2011 passed the Senate (Upper House) on 19 March 2012. This brings into play a number of other introduced measures that were subject to the passing of this Bill and the previously passed Carbon Tax legislation.
These other measures include:
- Increasing the small business immediate asset write-off threshold from the existing $1,000 to $6,500 (originally proposed as $5,000 in the 2010 Federal Budget), effective 1 July 2012.
- Allowing small businesses to claim an upfront deduction of $5,000 for motor vehicles purchased from 1 July 2012, with the balance of the cost depreciated in the single pool.
- Reductions to the company tax rate.
Refer to the ‘Reduction of Company Tax Rate’ article in this month’s Xpress.
- Gradually phased increase of the Superannuation Guarantee Levy to 12 per cent.
- Abolition of the Superannuation Guarantee age limit.
Where small businesses have the flexibility to manage their depreciable asset purchases and requirements, consideration should be given to the timing of these purchases because of the availability of these effectively accelerated depreciation write-offs.
Further, where companies have the opportunity to access tax planning or other strategies that impact the level and/or timing of taxable income being generated, consideration should be given to these items in light of the changes to the company tax rate.
All employers will need to consider the cost impact of the phased increase of the Superannuation Guarantee Levy and the abolition of the Superannuation Guarantee age limit in salary negotiations, budgeting, pricing and gross margins.