Repeal of the Carbon Tax and the MRRT

On 17 July 2014, a series of bills to repeal the Carbon Tax and the Mineral Resource Rent Tax were reintroduced into parliament. The bill to repeal the Carbon Tax was passed by the Senate. The bill to remove the Mineral Resource Rent Tax was debated and passed in the Senate with amendments to remove some cost-saving measures requiring the bill to return to the House of Representatives before it is passed.

Importantly, key cost saving measures in this bill impacting businesses as part of the removal of the Mineral Resource Rent Tax are not set to be amended and will be repealed in full.

Those measures include: 

The repeal of the loss carry-back measure

From the beginning of the 2013-14 income year, companies are no longer able to carryback their tax losses to an earlier year.

Capital allowances for small business entities

The small business entity instant asset write-off threshold will be reduced to $1,000 for assets purchased on or after 1 January 2014. Assets purchased by a small business entity prior to 1 January 2014 are still eligible for the instant asset write off threshold of $6,500. As a result of the changes to the threshold, an entity can claim a deduction for the entire value of their general small business pool where the value of the pool is less than $1,000 (reduced from $6,500 previously).

Special rules allowing a small business entity to deduct the first $5,000 of the cost of a motor vehicle, plus 15 per cent of any remaining cost, will no longer apply for motor vehicles purchased post 1 January 2014. Motor vehicles purchased from 1 January 2014 will be subject to the same rules as other depreciating assets.

Superannuation Guarantee Charge Percentage

The Superannuation Guarantee charge percentage was set to increase from 9.25 per cent to 9.5 per cent for the year starting on 1 July 2014, and gradually increase by half a percentage point each year until it reaches 12 per cent for years starting on or after 1 July 2019. However, now the Superannuation Guarantee charge percentage is set to pause at 9.25 per cent for the years starting on 1 July 2014 and 1 July 2015, and increase to 9.5 per cent for the year starting on 1 July 2016, and then gradually increase by half a percentage point each year until it reaches 12 per cent for years starting on or after 1 July 2021.