Sly Budget Changes

A few changes have slipped into the budget and haven't attracted much attention:

1). A win....From 1 July 2015 business start-up costs will become deductible. Establishing a company, legal advice for establishing etc. That's great news.

2) A win...From 1st April a employee can access multiple electronic devices used for work purposes and its FBT exempt. This allows a iphone, ipad and MacBook for example. The former rule didn't consider similar items and allowed a sole device.

3) Boooo.....Changes to deductions for motor vehicles. This one may be nasty.
After 1 July 2015 vehicle deductions for business / personal use etc will be subject to 2 methods rather than the previous 4 methods.

OUT = 12% of cost method which avoided need for substantiation receipts and logbooks etc. ideal for older cars etc.
OUT = 1/3rd expenses method for people who didn't do a logbook.

So now its EITHER logbook or a 5,000km cap is placed on deductions under the cents per KM method. Ouch.

Tip : Start thinking of when you will do a logbook if you want to max deductions. Also retaining records of ALL vehicle costs. Many taxpayers may find deductions substantially cut for vehicle use or allowance deductions. This could also eave the employee with a unfunded tax bill.
 
So now its EITHER logbook or a 5,000km cap is placed on deductions under the cents per KM method. Ouch.
I know in the past that logbook has been extremely painful. My business partner's logbook just came up for renewal and he got a free app to track his business use. It was very simple and took all the pain out of keeping track. It seems more people have smartphones these days so logbook might not be such as issue as it once was.
 
Is logbook for all travel or do they allow you to do an X week sample that is representative of always?
 
I know in the past that logbook has been extremely painful. My business partner's logbook just came up for renewal and he got a free app to track his business use. It was very simple and took all the pain out of keeping track. It seems more people have smartphones these days so logbook might not be such as issue as it once was.

I had a period of years when I was reimbursed mileage. Kept the logbook in the car, recorded all business trips. Used the logbook fortnightly to claim reimbursement and totalled up the kilometres at the end of the year. No issues.
 
1). A win....From 1 July 2015 business start-up costs will become deductible. Establishing a company, legal advice for establishing etc.

Do you have to be starting a business or could this be claimed when setting up a company/trust for investing?
 
From the Master Builders Assoc NSW:


"Special update - 2015/16 Federal Budget

Hello SNM,

Master Builders believes the new Budget should have a positive impact on the building and construction industry and in particular welcomes the Government's $50 billion infrastructure package. But roads are not everything and the Government will need to focus on broadening infrastructure investment to include urban investment in the post-Budget period.

Big Wins For Builders

Nearly 100,000 small building firms are winners from the Federal Budget. In line with Master Builders call for measures to reboot confidence and boost business viability and prospects in the here and now, the Government's Jobs and Small Business Package will be hugely beneficial to builders.

Small Business Package

The $5.5 billion package includes:
100% immediate write-off of assets worth up to $20,000 effective from 12 May 2015 until June 2017.
1.5% tax cut for small companies 5% tax discount for small firms that are not incorporated.
No more FBT on tablets, laptops and smart phones.
Capital Gains Tax discount for unincorporated firms who want to incorporate.

Infrastructure:
Western Sydney Infrastructure Plan: $2.9 billion with $7 million provided in 2015-16.
Pacific Hwy duplication: $5.6 billion with $542 million provided in 2015-16.
WestConnex: $1.5 billion plus a concessional loan of up to $2 billion to accelerate the new M5 section with $450 million provided in 2015-16.
Northern Sydney Freight Corridor: $691 million with $100.9 million provided in 2015-16.
NorthConnex: $405 million with $143 million provided in 2015-16.
M1 Productivity Package: $195.8 million with $11 million provided in 2015-16.

For a comprehensive review of the new budget, download Master Builders Australia's full budget report."

They seem pretty happy with it.
 
Thanks Paul

I am a big fan of the upfront deductions. Is likely to help certain businesses get a little boost in the last week of each quarter too.
 
I know in the past that logbook has been extremely painful. My business partner's logbook just came up for renewal and he got a free app to track his business use. It was very simple and took all the pain out of keeping track. It seems more people have smartphones these days so logbook might not be such as issue as it once was.

Hi Perthguy,

Would you mind letting me know what logbook app your business partner uses?

Thanks
Al
 
I know in the past that logbook has been extremely painful. My business partner's logbook just came up for renewal and he got a free app to track his business use. It was very simple and took all the pain out of keeping track. It seems more people have smartphones these days so logbook might not be such as issue as it once was.

If the app complies yes they can be very handy. Tracking business use solely is a common mistake. Also failing to record odometer start date and end dates. I have seen many taxpayers use foreign logbook apps which fail the ATO requirements : https://www.ato.gov.au/Business/Inc...Calculating-your-deduction/Keeping-a-logbook/
 
So now its EITHER logbook or a 5,000km cap is placed on deductions under the cents per KM method. Ouch.

On top of this, the cents per kilometre method will be at a set rate of 66c per km, instead of the current three rates for different engine sizes.
 
I want to correct Joe Hockey on something. He said that small business can claim a $20K deduction for acquiring a single asset.

I ran the numbers and believe that many small business can acquire a SINGLE asset prior to 30 June that has a cost of up to $25,881 and achieve a full write-off.

Kudos and praise to the first post who can explain how and the catches. :)
 
Is logbook for all travel or do they allow you to do an X week sample that is representative of always?

It's for all travel. The log book needs to be kept for three months, and this percentage can be used for five years, unless your business use changes significantly.
 
On top of this, the cents per kilometre method will be at a set rate of 66c per km, instead of the current three rates for different engine sizes.

Ah yes...Interesting that the Assist Treasurer explained that modern car running costs are lower and sang the benefits for small engine sized cars. Then trumpeted the $845m budget saving....

Interesting they left FBT methods alone. Its just a matter of time before FBT can be simplified to cut red tape and align the two :) That could be nasty. When we don't have a local car industry maybe ?
 
Ah yes...Interesting that the Assist Treasurer explained that modern car running costs are lower and sang the benefits for small engine sized cars. Then trumpeted the $845m budget saving....

Interesting they left FBT methods alone. Its just a matter of time before FBT can be simplified to cut red tape and align the two :) That could be nasty. When we don't have a local car industry maybe ?

Agree, they'll change the FBT rules soon enough. My cynical opinion is they left it alone this time, because they kicked up such a fuss in opposition when Labor tried to change the FBT car rules a few years ago.
 
I want to correct Joe Hockey on something. He said that small business can claim a $20K deduction for acquiring a single asset.

I ran the numbers and believe that many small business can acquire a SINGLE asset prior to 30 June that has a cost of up to $25,881 and achieve a full write-off.

Kudos and praise to the first post who can explain how and the catches. :)

Hi Paul

My guess would be that it is a combination of the $20,000 immediate write off, effective from the 12th May and the standard depreciation deduction available under the 'old' rules that apply from 1.7.1014 till the 30th june 2014.

Cheers
 
$25,881 less GST. Pooled depreciation at 15% gets to $19,998 for the pool write off.
Catch is that you cant have any other assets in the pool or it would be over the limit?
 
$25,881 less GST. Pooled depreciation at 15% gets to $19,998 for the pool write off.
Catch is that you cant have any other assets in the pool or it would be over the limit?

GOLD MEDAL goes to Asheam for confirming Joe Hockey cant use a calculator and misled Parliament. (I was playing the role of Bill Shorten)

I have this question arising from that...
Lets say the pool is $25K at 1st July 2015. On what date does the depreciation reduce the pool to $18,700 ? Is it 1st July or 30 June. Or might it reduce by $17.26 a day ? Meaning the pool has fallen to the $19,999 point on the 15th April. Can I write off the pool on 16th April ?? Then buy another $21K asset and write it off after 16th April ......

Such a simple write off yet so complex.
 
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