Treasurer Joe Hockey revealed yesterday that $2.4 billion of unlegislated Labor tax measures will be discarded in preparation for a tough May budget.
In our experience, the various tax and superannuation measures announced but never legislated by the previous government added to uncertainty for many businesses. Mr Hockey’s announcement provides the beginning of welcome change towards more stability within our taxation system.
At William Buck, we feel it is important to keep our clients informed of any changes to tax law that will impact them. Of the seven measures scrapped yesterday, there were three that were of the most significance to our clients.
We are pleased to advise that the proposed controversial $2000 cap on tax deductible self-education expenses is being discarded in full.
Mr Hockey expressed the view that there was no evidence of systematic abuse of the current system, and further points out that of the claims made 80 per cent of the taxpayers involved earned less than $80,000 a year.
Self-employed professionals are the standout winners in this tax law change announcement and we know that many of our clients have been concerned about the impact of this on their business.
FBT Treatment of Cars
Labor’s previous fringe benefits tax announcement proposed to enforce the use of log books in calculating FBT on cars. This change would have meant car salary packaging may become more costly to administer for many businesses. As a result it instantly had a negative effect on the car leasing, car sales and salary packaging industries.
Mr Hockey has announced that the proposed changes will not go ahead and the current rules will continue to apply. By scrapping the proposed changes, car makers, charities, businesses and those who receive a vehicle as part of their salary packaging come out on top.
The Coalition has rejected the promised Labor government co-payments on super for low income earners and also rejected their plan to tax retirees on super fund earnings over $100,000 per annum. Mr Hockey argued that the extra tax on high income earners would have been complicated and expensive to administer, ineffective and would have created instability in an area that desperately needs stability. Baby boomers looking anxiously at their retirement funds are delighted with the announcement.
William Buck will continue to follow any news related to these matters and keep you informed about the changes that affect you.