What’s new for Individual Taxes in 2016?
Its tax time so lets look at what’s new for individual taxes
Every year there’s some good news and some not so good news when it comes to rule changes affecting individual taxes. So lets look at what’s new for individual taxes. This year there are probably more not so good items than good, though overall the impact isn’t too bad. Most interestingly is that the good all relate to business activities. The not so good generally will impact employees and families …
The not so good …
The Zone Tax Offset is now much harder to access
From 2016, you can now only qualify for the Zone Tax Offset if your “usual place of residence” is within a Zone. This means the vast majority of fly-in-fly-out and similar workers will no longer qualify for the Zone Tax Offset.
The Net Medical Expenses Tax Offset is now limited in its application
From 2016, you can now only claim the Net Medical Expenses Tax Offset in relation to expenses incurred for disability aids, attendant care or aged care. Many people that have been able to claim the offset in the past, often in relation to medical expenses incurred in relation to children, will now no longer qualify.
There are less ways to claim Work Related Car Expenses
In all honesty, this will affect very few of our Clients, but the former four (4) methods available to claim car expenses has now been reduced to two (2) methods. The two (2) remaining are the however the two most used methods being the “Logbook” method and the “Cents Per Kilometre” method.
The good …
Small Business Start-up Costs are now immediately deductible
It actually may be news to find out costs incurred on professional advice and Government fees related to starting a small business were not previously immediately deductible, but from 2016 this is no longer an issue.
There is a new Small Business Income Tax Offset
If you earn taxable income from business activities (be it in your own name as a Sole Trader, or via a Partnership, or via a Trust) this new offset can reduce your tax payable by up to $1,000. The offset is 5% of the portion of your tax liability that relates to business activities (capped at the $1,000).
Changes to the taxation of Employee Share Schemes
Broadly the taxation of Employee Share Schemes (“ESS”) has become more generous and made such schemes more attractive. The rules can be complex and do have a number of elements, so if you have received, or are considering accepting shares under an ESS, please get in touch.
Other items not new for 2016, but still news worthy …
Small Business Instant Asset Write-off still applies for 2016
The ability to immediately write-off business assets costing up to $20,000 was introduced in 2015, but despite being a temporary measure, this still applies for the 2016 tax year as well. Note: if you are registered for GST, this means items that cost up to $21,999 qualify because after claiming the input tax credits, the cost for depreciation purposes is below the $20,000 threshold.
The thresholds for the Medicare Levy Surcharge & Private Health Insurance Rebate remain unchanged
The thresholds at which these items apply and/or reduce have been frozen from 1 July 2015 (and currently are intended to remain that way for three years). This means more people will become liable for the Medicare Levy Surcharge and/or will receive a reduced Private Health Insurance Rebate each year as their earnings increase (even gradually, perhaps just in line with inflation).
The Temporary Budget Repair Levy still applies to high income earners
The Temporary Budget Repair Levy, which added a further 2% of tax payable for those earning over $180,000 in the 2015 year, unfortunately still applies in 2016. These are the key items that will affect most clients as to what’s new for individual taxes. We will look to provide a similar post regarding what’s new for business taxes soon …