Broader changes for business have also been included in this years' Budget, such as ESS rule changes and the expansion of GST to digital goods and services.
Date of effect: 1 July 2015
Recent reforms to employee share schemes are to have additional technical amendments to the draft legislation enabling reforms to the taxation of employee share schemes. The changes:
- Exclude eligible venture capital investments from the aggregated turnover test and grouping rules (for the start-up concession);
- Provide the CGT discount to employee share scheme interests that are subject to the start-up concession, where options are converted into shares and the resulting shares are sold within 12 months of exercise; and
- Allow the Commissioner of Taxation to exercise discretion in relation to the minimum three-year holding period where there are circumstances outside the employee's control that make it impossible for them to meet this criterion.
A number of other amendments accompany these changes to make employee share schemes more accessible for Australian businesses and their employees.
These changes will take effect with the remainder of the enabling legislation from 1 July 2015.
Date of effect: Supplies made on or after 1 July 2017
Providers of digital products and services in Australia will now be subject to GST. The move, dubbed the so-called "Netflix" tax is intended to level the playing field for companies that currently provide their services such as:
- ebooks and other services such as consultancy and
- Professional services receiving similar GST treatment, whether they are a local or foreign supplier.
The measure is expected to generate $350m over 4 years.
Any business that supplies digital products to Australian consumers not currently subject to GST will potentially be affected by this change, however it must be agreed by Australian State and Territory Governments first.
It will be interesting to see how the Government and ATO ensure compliance with the new measures particularly where many of the foreign suppliers would not typically have a physical presence in Australia.
Date of effect: Mid 2016
A single online registration site will be implemented in order to streamline the registration of new businesses.
Under the proposed new system, businesses will be able to log onto business.gov.au and enter the relevant details once in order to manage a number of business registration requirements such as:
- ABN registration
- Company registration
- Business name registration
- GST registration
- PAYG withholding registration
- FBT registration
- An Australian Business Account as well as
- An online payment mechanism of registration costs.
The advent of crowd sourcing has helped many start-ups source the seed and innovation dollars often required to get their business off the ground. Crowd sourcing allows start-ups to raise funds online from a large pool of small investors, and the Government clearly sees the idea is good for entrepreneurs.
ASIC will receive $7.8m to implement and monitor a regulatory framework to facilitate the use of crowd-source equity funding (CSEF), including simplified reporting and disclosure requirements. Startups will also benefit from the capacity to deduct professional fees as soon as they start their business.
Importers should be aware that the Import Processing Charge (IPC) and import-related licence charges, are about to go up, raising $107.6m over 4 years. The IPC will be restructured to recover the cost of cargo and trade-related reform activities, remove the differential charges for post, air and sea cargo declarations, and introduce higher charges for manual documentary declarations.
Licence charges will be restructured for brokers, depots and warehouses, including introducing warehouse and broker licence application charges, increasing the broker licence renewal charge and introducing a warehouse licence variation charge.
Date of effect: Assessments for income years on or after 1 July 2014
A cap of $100m on the amount of eligible Research & Development (R&D) expenditure has already been introduced. Any expenditure above the cap will receive a lower offset at the company tax rate.
Date of effect: 1 July 2016 (but can be applied from 1 July 2015)
The Government is proceeding with the announced changes to the taxation of Managed Investment Trusts but moving that start date back to 1 July 2016. Managed Investment Trusts will be allowed to choose to apply the new rules from 1 July 2015.
Managed investment trusts and other trusts treated as managed investment trusts will continue to be allowed to disregard the trust streaming provisions for the 2015/2016 income year. This will ensure these interim arrangements for managed investment trusts continue to apply until the commencement of the new rules.
The new system for MITs contains some significant changes, including an attribution model which allows amounts to retain their tax character as they flow through a MIT to members, the ability to carry forward understatements or overstatements of taxable income rather than having to re-issue investor statements and allowing upwards cost base adjustments for unit holders to prevent double taxation.
The new rules will also introduce amendments to the public trading trust rules. Under the current rules, a trading trust can be treated as a public trading trust and be taxed like a company if at least 20% of the units in the trust are held by complying superannuation funds.
The new rules will ensure that any interests held by superannuation funds and tax exempt entities can be disregarded when applying the 20% threshold. For example, a trust that is wholly owned by complying superannuation funds should not be treated as a public trading trust under the new rules.
Date of effect: 1 April 2016
The Government is introducing a separate single grossed-up cap of $5,000 for salary sacrificed meal entertainment and entertainment facility leasing expenses (meal entertainment benefits) for employees. This will affect employees of public benevolent institutions and health promotion charities.
Meal entertainment benefits exceeding the separate grossed-up cap of $5,000 can also be counted in calculating whether an employee exceeds their existing FBT exemption or rebate cap. All use of meal entertainment benefits will become reportable.
This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.