Budget Changes For Business 2014

Company Tax Rate

In the budget the Government announced the company tax rate will be reduced from the current rate of 30 per cent to 28.5 per cent with effect from income years beginning on or after 1 July 2015. The reduction will apply to all companies, however, for companies with a taxable income in excess of $5 million the likely benefits from the rate cut will be largely offset by the imposition of the Paid Parental Leave (PPL) Levy. The PPL Levy will be charged at the rate of a 1.5 per cent on taxable income that exceeds $5 million.

Fringe Benefits Tax

Fringe Benefits Tax will increase from 47% to 49% from 1st April 2015 until 31st March 2017 to tie in with the introduction of the Budget Repair Levy for high income earners and to prevent avoidance of the levy.

Superannuation Guarantee Contributions

The timetable for increasing Superannuation Guarantee Contributions to 12% has been slowed. Superannuation Guarantee Contributions increase from 9.25% to 9.5% as of 1st July 2014 with the next increase scheduled from 1st July 2018 to 10%.

Mature Aged Workers

As of 1st July 2014, a new wage subsidy called ‘Restart’ will be introduced. It is specifically designed to encourage employment of Australians aged 50 or over who have been receiving income support (including Disability Support Pension) for at least six months. The maximum subsidy is $10,000 and instalments will commence after the worker has been employed for at least six months. The maximum $10,000 subsidy will be pro-rata for part-time employment and will be paid as $3,000 after the first six months, another $3,000 after twelve months, $2,000 after 18 months and $2,000 after 24 months.

Research and Development Tax Incentive Reduced

The Research and Development tax incentive will be reduced by 1.5 percent from 1 July 2014 (from 45 to 43.5 per cent) for refundable tax offsets available to eligible entities with an aggregated turnover of less than $20 million, and from 40 to 38.5 per cent for non-refundable tax offsets available to all other eligible entities.

Re-Introduction of Fuel Excise Indexation

The fuel excise rate has been frozen at 38.143 cents per litre since March 2001 when it was abolished by the Howard government. The re-introduction of bi-annual indexation and excise-equivalent customs duty on all fuels (except aviation fuel) will commence from 1st August 2014 and will be based on the Consumer Price Index (CPI).  The impact on businesses will be that they cannot claim a credit for the fuel excise under the Fuel Tax Credit system and will have to either absorb some or all of the increased cost, or pass it on to their customers.