Announcement of dates of effect for tax concession repeals make a mockery of “less red tape”

 

THE Federal Government has announced the dates from which the small businesses concessions attached to the repeal of the mining tax will no longer apply.

The dates are the same as those proposed in the original repeal Bill (that was defeated in the Senate) for the instant asset and motor vehicle write off.

The government has however backdated the repeal of the company loss carry back concession. This concession was originally meant to be removed from the date of royal assent. The original repeal bill was introduced on November 11, 2013 so the removal of this concession from July 1, 2013 will come as a shock to small businesses.

The Minister for Finance, Mathias Cormann, has set the following dates of effect for relevant taxpayers:

• abolition of the mining tax from October 1, 2014
• abolition of the company loss carry-back from July 1, 2013
• reduction of the instant asset write-off from January 1, 2014
• abolition of accelerated depreciation of motor vehicles, also from January 1, 2014.

In relation to the instant asset write off, when eligible small business taxpayers are purchasing depreciating assets, the reduced threshold of $1,000 will apply from January 1, 2014 rather than the $6,500 threshold that was available before this date.

The accelerated depreciation for motor vehicles will cease to be available to eligible small businesses for motor vehicles purchased after January 1, 2014.

In respect of the loss carry-back concession, it cannot be claimed for the whole of the 2013-14 financial year as the government has backdated this change to July 1, 2013.

The ATO has advised that it will waive all penalties and interest in instances where taxpayers have chosen not to prepare their returns on the basis of the government's announcement of these measures, if they seek to have their income tax assessments amended within a reasonable time.

As the original repeal bill was introduced in November 2013 and these changes received royal assent on September 5, 2014 — almost a full year afterward — the date of implementation has come as a surprise to Taxpayers Australia and the wider small business community.

Head of Tax with Taxpayers Australia, Mark Chapman, criticised the new measures.

“With the mining tax itself not being abolished until October 1, 2014 the government appears to be on a tax grab from small businesses by making these measures retrospective. In addition, the added burden of amending tax returns to comply with the new law when taxpayers have claimed these concessions in good faith in accordance with the law as it stood at that time is unfair and contrary to the principle of reducing red tape.

“In relation to the loss carry back concession, removing the ability to claim this measure for the 2014 income year entirely, given that the original bill proposed the measure would apply from the date of royal assent, is even more disappointing,” Chapman added.

“The small business community badly needs certainty and clear guidance from the government rather than backdated measures that leave them further out of pocket even after they have, in some cases, lodged their tax return and paid their liability for the year.”

Taxpayers Australia is a not-for-profit organisation committed to a fairer and more transparent taxation system for every Australian taxpayer. Its aim is to provide taxation practitioners, superannuation professionals, small businesses and individuals with up-to-date, informative and above all understandable information about taxation – to ensure that every Australian pays the right amount of tax and not a cent more.

Visit our website: www.taxpayer.com.au

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