August 2015 newsletter

Refresh - 3 tax changes for small business

The government has introduced legislation for the following three small business measures that, if passed, will apply from 1 July 2015:

A tax offset to individuals who run small businesses (with an aggregate annual turnover of less than $2 million), or who have a share of a small business’ income included in their assessable income. The tax offset is available to individuals, partners, or beneficiaries of a trust that is a small business entity.The tax offset is 5% of the income tax payable on the portion of an individual’s income that is small business income, capped at $1,000 per annum.

An immediate deduction for some business start-up expenses, such as legal advice and registration fees, including government fees and charges as well as costs associated with raising capital.

An exemption from FBT where small businesses provide an employee with more than one work-related portable electronic device, even where the devices have substantially identical functions.

Data matching to be expanded on individual returns

The ATO has advised that last year, it cross-referenced information reported in tax returns against over 600 million transactions provided to it by third parties to identify omitted income and gains, or incorrectly-claimed offsets or entitlements to exemption from surcharges.

It also contacted nearly 400,000 taxpayers who had apparent discrepancies in the information they reported in their tax returns.

The ATO said that traditionally, it has focused on areas such as omitted interest and employment income, but this year it is expanding its data matching to encompass a greater range of areas, such as:

• capital gains tax (CGT) from the disposal of shares and property;

• employment-related foreign source income; and

• contractor income from payments made by government agencies.

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