The buzz generated by the Federal Budget may have come and gone, but it is important to remember that there are several changes to the tax laws that will affect your business’s 2012-13 income tax return, as well as have an impact on subsequent years.

Increase to the compulsory super guarantee rate from 9% to 9.25%

From July 1, 2013 (the 2013-14 income tax year), you will need to increase the rate you use to work out the super guarantee payments you make for your employees from 9% to 9.25%. What you need to do is:

• update your payroll and accounting systems to apply the appropriate increase to the super guarantee rate
• continue to increase the rate you use to work out the super guarantee payments you make for your employees each year until July 1, 2019 (refer to the table on the following page), and
• if you have 19 or fewer employees, consider using the Small Business Superannuation Clearing House to help you meet your super guarantee obligations.

The table below details the gradual increase to the super guarantee rate over a period of seven years:

Removal of existing upper age limit

From July 1, 2013, as a result of the removal of the existing upper age limit for super guarantee payments, you must make super guarantee payments for employees 70 years and older – potentially a big change as more and more employees delay their retirement.

On the other hand, this offers flexibility for employees. As long as an employee is working and meets any other pre-existing conditions they will be entitled to the superannuation guarantee no matter how old they are.

“MySuper” commences

Superannuation funds will begin offering cheap, simple and easily accessible “MySuper” products from July 1, 2013 – replacing default super funds from January 1, 2014. The ATO has advised employers to contact their default fund now to discuss the changes in product offerings for employees.

It is expected however that most existing default superannuation funds will offer a MySuper product – meaning employers will not have to make any change to the payment of the super guarantee contributions.

Change to fuel tax credit rates

Changes will commence from July 1, 2013 in regards to the fuel tax credit rates. You may be affected by:

• some rate changes due to increased carbon charge amounts
• rate changes for transport and non-transport gaseous fuels, and
• a possible rate change for fuels used in heavy vehicles for travelling on public roads.

When you calculate your fuel tax credit claim, you need to use the rate that applied when you acquired the fuel. However, for fuel used in heavy vehicles for travelling on a public road, you need to use the rate in effect at the beginning of the tax period covered by your business activity statement (BAS). You will continue to claim your fuel tax credits on your BAS.

In addition, rates for some fuels are changing for entities declared by the Clean Energy Regulator to be a designated opt-in person under the opt-in scheme.

Keep ABR details up-to-date

On another note, the Australian Business Register (ABR) is reviewing and cancelling Australian business numbers (ABNs) where records indicate holders are not conducting an enterprise, and are therefore not entitled to hold an ABN.

To ensure your ABN is not incorrectly cancelled, check with this office that your ABR details are up-to-date. If your ABN is cancelled, your AUSkey and registration for the following will also be removed:

• goods and services tax (GST)
• luxury car tax
• wine equalisation tax, and
• fuel tax credits.

Similarly, once your ABN has been cancelled, you will receive a letter providing the reason and your review rights. If you do not agree with the cancellation of your ABN, you can object – and if you can show that you are indeed entitled to an ABN, it can be reinstated.

In addition to the ABN cancellation review, the ABR will also be contacting existing ABN holders to remind them of the requirement to update their records. If you are an ABN holder, you are legally required to notify the ATO of changes to your registration details within 28 days. Call us if you need guidance.

Changes to personal income tax rates

In the 2012-13 income tax year, the tax-free threshold increased from $6,000 to $18,200. This means that if you earn less than the $20,542* you may not have to pay any tax, although you will still have to lodge a tax return.

Resident companies (but not however not-for-profit companies) such as partnerships, trusts and super funds are required to file tax returns regardless of their incomes.

Changes to the low-income tax offset (LITO)

The LITO reduces the amount of income tax payable on your taxable income. The maximum LITO of up to $445 in the 2012-13 income tax year (down from the $1,500 in the 2011-12 income tax year) applies to individuals who earn an income of up to $30,000.

A reduced portion of the LITO is still able to be claimed if the individual taxpayer earns between $30,001 and $66,667 in taxable income. The LITO reduces by 1.5 cents for each dollar of additional taxable income over $30,000.

Immediate write-off changes

From the 2012-13 income year, small businesses can:

• immediately write-off assets valued at less than $6,500 (up from $1,000 in the 2011-12 income tax year) used in the business, for example photocopiers, laptops, fridges and desks in the income year in which they start to use the asset or have it installed ready for use, for a taxable purpose in the business
• allocate depreciating assets with a cost of $6,500 or more to the general small business pool to be depreciated at a rate of 15% in the year of allocation and 30% in other years irrespective of the effective life of the asset
• immediately write-off up to $5,000 of the cost of a motor vehicle. This applies to motor vehicles costing $6,500 or more in the income year in which they start to use the motor vehicle, after allocating a motor vehicle to the general small business pool. The remaining value is depreciated through the general small business pool at a rate of 15% in the first year and 30% in later years.

Reporting of contractor payments for building and construction industry

A new reporting obligation from the 2012-13 income tax year requires all businesses in the building and construction industry to report the total payments they make to each contractor. The definition of building and construction services is broad (consult this office for a more exhaustive list) but can include alterations, demolitions, design, erection, excavation, installation and maintenance. The taxable payments annual report is due on August 25 for businesses that enlist a tax agent – a concessional lodgement arrangement is available for this year only.

For more information on the changes and what their ramifications are in regards to your business, consult this office.