By Justin Inskip, Director, Westlawn Business Services 25 September 2015
This tax roundup for September 2015 provides an update on what you need to know in relation to business tax and superannuation. It includes Budget measures which have now become law, distributions of income to SMSFs from discretionary trusts, the ATOs focus on rental properties, the receipt of individual interest in net income of partnership, SuperStream and more.
Small business Budget measures now law
The following small business tax measures announced in the 2015-16 Federal Budget have now passed into law:
Company tax rate cut
Increase to instant asset write-off threshold to $20,000
Small business simplified depreciation
Preparing for droughtmeasures
Tax rate cut for other business entities
FBT on work-related electronic devices
Immediate deductibility for professional expenses for new businesses.
The ATO will increase its focus on rental property deductions this tax time and is encouraging rental owners to double-check that their claims are correct before lodging their tax returns.
In particular, the ATO is paying close attention to:
Excessive deductions claimed for holiday homes
Husbands and wives splitting rental income and deductions for jointly-owned properties where such claims are not supported
Claims for repairs and maintenance shortly after the property was purchased, and
Interest deductions claimed for the private proportion of loans.
While the ATO will pay closer attention to these issues in 2015, it will also be educating rental property owners about what they can and cannot claim.
For example, the ATO is writing to rental property owners in popular holiday locations, reminding them to claim only the deductions they are entitled to, for the periods the property is rented out or is genuinely available for rent.
Receipt of individual interest in net income of partnership
In June this year, the ATO issued a draft taxation determination TD 2015/D2 entitled “Income tax: if a retiring partner receives an amount representing their individual interest in the net income of the partnership for an income year, is the amount assessable under section 92 of the Income Tax Assessment Act 1936?”
The draft determination answers this question as ‘yes’. Subject to paragraph 3 of the draft determination, the amount is included in the partner’s assessable income for the income year under section 92 of the ITAA 1936.
This is the case regardless of:
How the payment is labelled or described (including whether the payment is expressed to be consideration for something provided or given up by the partner), and
The timing of the partner’s retirement (including whether the partner retires before the end of the income year), and
The timing of the payment.
However, according to the draft determination, an amount is not assessable under section 92 to the extent that it represents net income of the partnership which is attributable to both a period when the partner was not a resident of Australia, and sources outside of Australia.
Reasonable travel and overtime meal allowance expense amounts for 2015-16
On 1 July 2015, the ATO issued taxation determination TD 2015/14 “Income tax: what are the reasonable travel and overtime meal allowance expense amounts for the 2015-16 income year?”
The determination sets out the amounts that the Commissioner considers are reasonable (reasonable amounts) for the substantiation exception in the income tax legislation for the 2015-2016 income year in relation to claims made for:
Overtime meal allowance expenses – for food and drink in connection with overtime worked and where a meal allowance has been paid under an industrial instrument.
Domestic travel allowance expenses – accommodation, food and drink, and incidentals that are covered by the allowance.
Travel allowance expenses for employee truck drivers – food and drink covered by the allowance, and
Overseas travel allowance expenses – food and drink and incidentals covered by the allowance.
SuperStream now applies to small businesses
The ATO has issued a reminder that SuperStream has now started for small businesses. If your business has 19 or fewer employees, you need to be using SuperStream no later than 30 June 2016. If you have 20 or more employees, you need to be using SuperStream by 31 October 2015.
Westlawn Business Services Pty Ltd provides this information for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation.