Guarantee contribution reminder

If you haven’t already submitted your superannuation guarantee contributions for this quarter (January – March 2019), then it is time to get this chore done.

Finalising your contributions should be done as soon as possible so that they are received by your fund on or before April 28. Keep in mind that there are a number of public holidays coming up which may impede progress.

If you use a clearing house, the contribution should be forwarded to the super fund prior to the deadline in order to meet legal obligations. Clearing houses recommend allowing an extra week for this to occur. Contact us if you need any assistance.

Budget news

After looking over the Federal Budget it is clear that it is an election budget so we will see what happens once we know who’s in power. One item from the Budget that has been passed is the Instant Asset Write-Off.

Changes to the instant asset write-off

Amendment of the Instant Asset Write-Off for Small Business Entities Bill 2019 will increase the threshold to $30,000 and expand eligibility to include medium-sized businesses with a turnover of less than $50 million.

There will be now be three tiers for accountants and clients to consider due to the Prime Minister’s announcement to raise the threshold to $25,000.

The first tier will be the $20,000 threshold for depreciable assets acquired before 29 January 2019; the second is the $25,000 threshold for assets first used or installed between 29 January 2019 and 2 April 2019; and the third tier is a $30,000 threshold for assets first used and installed after the 2 April budget announcement and before 1 July 2020.

TaxBanter senior tax trainer Robyn Jacobson said that the new changes meant that accountants and taxpayers would need to pay special attention to the start dates and threshold values to determine eligibility.

“From 1 July 2020, the threshold reverts to $1000 for small business entities only. Medium-sized business will need to work out their asset’s decline in value under the ordinary depreciation provisions after 30 June 2020,” Ms Jacobson said.

Tax Institute’s senior tax counsel, Professor Robert Deutsch said lifting the threshold and extending concession availability to more businesses is a positive step. However, it does leave businesses in a situation where they will have to wrangle with three different thresholds in the 2019 income year if they want to claim the offset.

“Such a simple concession so favourable to small business is unnecessarily complicated for the 2019 income year. If you don’t get the timing or the amount right, you could miss out.”

RSM senior manager Tracey Dunn believes that clients will need to rely heavily on accountants to work through each tier and determine eligibility.

“It may mean more compliance costs as they will no doubt need the assistance of their tax adviser to determine which depreciation method is most appropriate for their business and whether they are even eligible for the instant asset write-off,” Ms Dunn said.

“With a three-tiered asset threshold and staggered commencement dates throughout the 2019 financial year, small business taxpayers will need to review their records carefully in order to determine which assets are eligible for the instant asset write-off.

“Given the complexities around accessing the instant asset write-off, determining what is an eligible asset along with determining the appropriate threshold and commencement date, small business taxpayers are strongly advised to seek advice from their tax advisers before purchasing assets.”