Federal Budget 2014 Highlights - How it Relates to Small Business
The 2014 Federal Budget has been constantly in the news after announcements about cuts to areas such as education, health and welfare. In view of the extensive publicity it is our goal here to help our small business clients understand what it means to them. So here’s some of the changes and an indication of how they might affect your business.
Superannuation Guarantee Rates
As originally proposed, the superannuation guarantee rate will increase to 9.5% from 1 July 2014. Over the next few years the rate will increase to 12% per annum, but at a slower pace with the increase to now occur over a 10 year time period that started in 2013/14.
The proposed further increases are as follows:
The concessional contribution limits from 1 July 2014 as previously announced are left unchanged at $35,000 for those individuals aged 49 or over on 1 July 2014 and $30,000 for those under 49.
For people less than 65 years of age, non-concessional contributions (i.e. contributions made from a person’s after tax income) will be capped at $180,000 per annum (or $540,000 over three years).
Any person who has had non-concessional contributions over the limit will be given the option to extract the excess contribution together with applicable earnings with no extra tax penalty on the superannuation fund as from 1 July 2013. However, the individual person will pay tax on the withdrawal of the earnings at their marginal tax rate.
Unfair Contracts Protection
A scheme to protect small businesses from unfair contracts pushed on them by big business will make unfair terms in standard form contracts void.
Small Business and Family Enterprise Ombudsman
A Small Business and Family Enterprise Ombudsman will be established to contribute to the development of business friendly laws and regulations and help small and family businesses in their dealings with government.
If you rely heavily on fuel then it’s about to get worse with twice yearly indexation to fuel excise reintroduced.
Reduction of Company Tax Rate
A reduction in the company tax rate of 1.5% will take effect from July 2015.
To help in addressing the increasing overheads of an ageing population, businesses that employ mature aged staff over the age of 50 will receive a $10000 wage subsidy over 24 months for each new full time worker in this category. A smaller subsidy based on hours worked will also apply for part-time workers.
A business employing a person who has been on ‘Work For the Dole’ for 6 months is also promised a subsidy from the government.
Temporary Tax Repair Levy
A Temporary Tax Repair (Debt) Levy of 2% on the highest marginal income tax rate will apply for the next 3 income tax years to taxpayers on incomes above $180,000.
Fringe Benefits Tax
The rate for calculating fringe benefits tax will increase to 49% from the current 47% from 1 April 2015 until 31 March 2017.
Entrepreneurs’ Infrastructure Program (EIP)
The Federal Government plans to create an Entrepreneurs’ Infrastructure Program to assist lifting the skill levels of small business, create jobs, commercialise good ideas, providing industry and market information, as well as access to management assistance that is to come from experienced providers in the private sector.
To make way for this, a number of current government programs including will cease from 1 January 2015.
Of course the budget contained other announcements as well, some of which will be debated long and hard in Parliament. We have concentrated on the main topics affecting small business.
As you can see, there are several changes that will relate to you if you have employees. Employers are responsible to ensure that the correct tax and superannuation is accounted for in relation to your employees. Consequently, it is very important that you keep your accounting software up to date and speak with us if you have any questions or concerns in relation to any of your accounting or tax affairs.
The information provided here is for general purposes only. Please contact us for more detailed information.