They say there are two certainties in life: death and taxes.
But business tax has been left in a rather uncertain position by the new government. It’s announced the scrapping of some taxes effective from January 1 this year, but has yet to pass the laws enabling this to happen.
The loss carry-back and the increase to the instant asset write-off were introduced by the Gillard government and funded by the mining tax. The new Abbott government has vowed repeal of the mining tax, as well as the initiatives it funds, including these two small business tax breaks.
But CPA Australia business policy adviser Gavan Ord tells SmartCompany the amending legislation has yet to be passed by the Senate, but if it is, it will apply retrospectively to January 1, 2014.
“It may not pass until the new Senate is sworn in on July 1, 2014,” he says. “Hence, there’s a risk that there could be a significant time gap between the enactment of the changes and their start date… which may create uncertainty for small businesses.”
The instant asset write-off is only a timing benefit, he adds. Businesses are still able to write off depreciation, but this will no longer take place immediately when an asset under $6500 is purchased. This has a cash flow effect on small businesses.
The Greens and Labor have suggested they will not vote to repeal the mining tax. This means the government will be forced to rely on the cross-benchers in the new parliament to pass the bill. What happens to it on the way is in the hands of our politicians, Ord says.
“It will cause some measure of confusion,” Ord says.
To be safe, however, businesses should probably not rely on being able to access either tax break any more.
Story continues on page 6. Please click below.
Myriam Robin is a reporter for SmartCompany and its sister site LeadingCompany. She has degrees in economics, international studies and journalism. She likes writing about businesses taking risks and doing new things.
