The Henry Tax Review

I was reading a recent article in the paper that suggests the Federal Government’s initial response to the Henry Tax Review may have delivered some benefit to Small Business owners because it seems there are very few nasty surprises.   

Yes, we did see that in its announcement, the Government wants to increase the Superannuation Guarantee levy up to 12% by 2020.   This will start with an increase of .25% (on the current rate of 9%) for the 2014 tax year – thus giving business time to prepare and consider this in future wage negotiations. Then on an annual basis, the rate continues to rise till 12% is achieved.

If that was a negative, one of the benefits identified relates to the way small business claims a tax deduction for new assets; this ostensibly will help with cash flow! An example of this is new assets costing up to $5k can be claimed in the full year (they are purchased). All other assets (except buildings) will be deprecated by 30% per year.   This is dependant upon this passing both houses of Parliament. Of course advice from a qualified accountant on this matter is advisable.

The only other change announced (at this time) was a reduction in the company tax rate for small business, from 30% to 28% effective from 1 July 2012.

It is important to note that this report produced 1000 pages and over 130 recommendations, with only a small amount being delivered now… so the obvious question is, what reforms are waiting for after the election?

- John Cachia