Tax News & Updates – Feb 2016

February 29, 2016

Tax News & Upcoming Events

Notable legislation passed by Parliament since our last update include the following:
The Tax and Superannuation Laws Amendment (2015 Measures No. 5) Bill 2015 contains important changes, such as:

  • Work related car expenses – the 12% of original value and one-third of actual expenses methods for claiming work related car expenses have been abolished from 1 July 2015. This leaves the log-book method and cents per km method as the only methods available for individual taxpayers to claim deductions for car expenses. Note: for the 2015-16 income year the cents per km rate is set at $0.66 per km.
  • FBT concessions – the Bill removes the reporting exclusion in respect of salary packaged entertainment benefits and introduces a cap on the allowable entertainment benefits for employees of ‘FBT exempt’ and ‘FBT rebatable’ employers.

The Tax Laws Amendment (Small Business Restructure Roll-over) Bill 2016 provides greater flexibility for small businesses to change their legal structure. The changes generally apply from 1 July 2016. Where a resident ‘small business entity’ transfers an ‘active asset’ (including depreciating assets, trading stock or revenue assets and CGT assets) of the business to another resident small business entity as part of a genuine business restructure any gains or losses that would otherwise be made can be deferred. This provides an exciting opportunity for small businesses to restructure their business without a tax penalty! Whether the restructure is ‘genuine’ will be determined based on all of the facts and circumstances, but a ‘safe harbour’ rule is included to provide certainty. If you are a small business owner and you have any questions about restructuring your business we strongly recommend you get in contact with us.

Important Tax Changes

ATO provides guidance on substantiating claims for deductions of more than $50 for mobile phone, internet and home phone expenses
Since our last update, the ATO have provided guidance on substantiating claims for deductions of more than $50 for mobile phone, internet and home phone expenses.
Most phone and internet plans are used for both work and private purposes. You need to work out the percentage that reasonably relates to your work use.

The ATO expectation is that you keep records for a 4-week representative period in each income year. These records may include:

  • Diary entries;
  • Electronic records; and
  • Analysed itemised bills.

You need to work out the percentage using a reasonable basis. This could include:

  • the number of work calls made as a percentage of total calls
  • the amount of time spent on work calls as a percentage of your total calls
  • the amount of data downloaded for work purposes as a percentage of your total downloads

If your work use is incidental and you are not claiming a deduction of more than $50 in total, you may make a claim based on the following, without having to analyse your bills:

  • $0.25 for work calls made from your landline,
  • $0.75 for work calls made from your mobile, and,
  • $0.10 for text messages sent from your mobile.

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