The Mining Resources tax was implemented to get big business
funding a larger share of the Federal tax revenue bucket. Now that
this has been repealed there are a number of additional measures
that have changed which may impact on small business.
The major changes are –
Repeal of company loss carry back rules
Freezing of rate of compulsory superannuation
Changes to immediate asset deductions for small business
For more detail on how these can impact on your business refer
Repeal of the company loss carry back rules
Recognising that many businesses incur a loss at some point in
their life cycle, the loss carry back rules were implemented in
order to allow a company to access a refundable tax credit by
allowing them to utilise a current year tax loss against a prior
year's tax liability. This would potentially allow a company to
"Claw back" and obtain a refund for tax paid in prior
years when it is followed by a tax loss year.
The loss carry back rules have been repealed effective from 1
July 2013 or, for companies with a substituted accounting period,
from the start date of the 2014 income tax year. Hence the loss
carry back rules can apply for the 2013 income tax year and from
2014 the old rules will apply in that the loss can be carried
forward and utilised in future years, subject to passing the
In cases where you have already lodged your 2014 income tax
return and taken advantage of the loss carry back rules, the ATO
will amend the return for you. They have indicated no penalties
will be levied for taxpayers who relied on the previous loss carry
Freezing of compulsory Superannuation guarantee
In what may be a welcome move for businesses in that the on
costs for employees and workers will be lowered, the removal of the
mining resource tax has resulted in the freezing of the compulsory
super payments for business. Given that super is also included for
workers compensation and payroll taxes, this will have the
additional impact of cost savings in these areas.
With a current rate of 9.5% this will now stay in place until 1
July 2020 when it will increase by 0.5% each year until it reaches
12% on 1 July 2025.
To assist with budgeting here are the new superannuation
contribution rates -
Year starting Superannuation Guarantee %
1 July 2014
1 July 2015
1 July 2016
1 July 2017
1 July 2018
1 July 2019
1 July 2020
1 July 2021
1 July 2022
1 July 2023
1 July 2024
On or after 1 July 2025
Removal of accelerated deductions for small business
The change in this area is slightly messy in that the changes
will be effective from 1 January 2014. This means that for people
who have already lodged their 30 June 2014 returns and relied on
the ability to deduct immediately assets acquired costs less than
$6,500, these returns now need to be amended. The ATO will not be
doing this for you so you will need to instigate the amendment
From 1 January 2014, a small business entity (turnover less than
$2M pa) can only obtain an immediate deduction for assets costing
less than $1,000. The previous threshold of $6,500 will continue to
apply until 31 December 2013.
Depreciating assets costing $1,000 or more from 1 January 2014
should be allocated to the SBEs general small business pool and
depreciated at 15% in the income year in which the assets are first
used or installed ready for use. The assets will then be
depreciated as part of that pool at 30% in subsequent income years.
This is not good news for taxpayers who relied on the $6,500 for
purchases between 1 January 2014 and the recent change.
The income tax treatment of any property lease incentive will vary, depending on the nature of the inducement provided.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).