Increase and expanding access to the instant asset write-off

From 2 April 2019, the instant asset write-off will be increased from $25,000 to $30,000.

For the first time, medium sized businesses (being those with an aggregated annual turnover of less than $50m) will have access to the instant asset write-off.

The increased write-off threshold applies to all assets acquired from 7:30PM AEDT on 2 April until 30 June 2020 and will continue to apply on a per asset basis.

For assets acquired costing more than $30,000, small businesses will continue to have access to the accelerated depreciation pool. However, medium sized businesses will continue to depreciate assets in accordance with the existing depreciation provisions.

A summary of the dates, thresholds and turnover amounts for the proposed changes are outlined below:

 Instant asset write-off amount

Asset first used/installed
‘ready for use’ between:
Small business
(turnover < $10m)
 Medium business
(turnover < $50m)
1 July 2018 to 28 January 2019 <$20,000 N/A
29 January 2019 to 7:30PM AEDT 2 April 2019
(currently before the Senate)
<$25,000 N/A
7:30PM AEDT 2 April 2019 to 30 June 2020 <$30,000 <$30,000

 

Introduction of measures to assist small businesses in tax disputes

From 1 March 2019, “small businesses” who apply to the Administrative Appeals Tribunal (“AAT”) to resolve their tax disputes will be eligible to receive:

  • 1-hour legal advice for a $100 payment prior to lodging their application;
  • An additional 1 hour of free legal advice, after paying a reduced application fee, where the taxpayer is not represented by a lawyer; and
  • Free external legal representation if the ATO decides to use external legal representation in AAT proceedings.

Small businesses will also be guaranteed a decision being made within 28 days of an AAT hearing.  $57.7m of funding will be provided over 5 years to fund these initiatives.  However, no guidance has been provided as to what constitutes a “small business” for the purposes of these measures.

 

Division 7A changes delayed by 12 months

The start date for the previously announced Division 7A integrity measures has been delayed by 12 months to 1 July 2020, to allow time for additional consultation.

The proposed integrity measures would see 7-year and 25-year loans eventually replaced with a single 10-year loan arrangement, UPEs being brought into the Division 7A regime earlier and the introduction of a new self-correction mechanism.  Taxpayers should continue to actively plan for the introduction of these measures.

 

Single Touch Payroll

The ATO will be provided with extra funding to support the expansion of Single Touch Payroll. Social security agencies will also receive data through the Single Touch Payroll system.

Single Touch Payroll applies to all employers from 1 July 2019, subject to transitional measures particularly for employers with 4 or fewer employees.

This change should reduce the compliance burden for taxpayers, but it will also make it easier for the ATO to identify irregularities which could indicate an underpayment of tax.

 

Corporate tax rates

No changes were announced to the already legislated corporate tax cuts for companies with aggregated turnover under $50m, being:

Income year Rate
2018-19 27.5%
2019-20 27.5%
2020-21 26%
2021-22 25%

No further policies were announced to cut rates for businesses over the $50m turnover threshold.

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