As is the case with tax, things are always changing and with the recent passing of the reduced company tax rate in the senate, there are a number of beneficial changes for businesses turning over between $2-10 million. We are beginning work on tax planning from the end of April as there is great opportunity now to make decisions before 30 June to minimise tax for the 2017 financial year.

**#### BUSINESS CLIENTS

REDUCTION IN COMPANY TAX RATE**

Finally! There is some good news for our business clients! Recently, the Government achieved stage 1 of its company tax reduction so it has been confirmed that all businesses with a turnover under $10 million will have their corporate tax rate reduced for the 2016/2017 year to 27.5%. This lower tax rate will apply to businesses with a turnover under $25 million in the 2017/2018 year and then to businesses with a turnover under $50 million from the 2018/2019 year. This is the first step in the 10-year process to reduce all company tax to 25%.

IMPUTATION CREDITS

Taxpayers that turnover under $10 million need to be aware that future imputation credits will only be received at 27.5%, even though company tax may have originally been paid at 30%. For companies that turnover $10 million for the current year there is still an opportunity for companies to receive their franking credits at $0.30/$1. The rules are complicated so I suggest that you talk with your client manager in relation to your specific tax situation.

TRUSTS

You should note as well that for trusts which have a turnover under $5 million, that there is an additional tax rebate. This is up from the current threshold of $2 million, with an 8% discount being rebated back to small business as an income tax offset (in the 2015/2016 year the rebate was only 5% and only applied to businesses with an under $2 million turnover).

BUSINESSES BETWEEN $2-10 million

Instant Asset Write-Off

Take note, you are now entitled to a $20,000 instant asset write-off before June 2017 (the amount is actually $20,000 + GST and applies to both new and second-hand assets).

Simplified Trading Stock Rules

These apply where you can write-off any trading stock under $5,000.

Prepaid Expenses

You can write these off 100% in the year incurred if the prepayment does not relate to more than 12-months into the future.

2-Year Amended Assessments

Taxpayers at this level are now entitled to a 2-year amendment period.

Choice of Accounting for GST on a Cash Basis

This is great news as this was previously limited to businesses with a $2 million turnover so you may be able to wind back some GST previously paid due to being on the accruals method.

Choice of Paying GST on a Quarterly Basis

This was not always available to businesses between $2-10 million turnover

Immediate deductibility for small business start-ups

This enables the immediate write-off for many small business start-up costs. Previously only under $2 million turnover business were entitled to this and many of these start-up costs needed to be written off over 5-years.

Please take advantage of these proposed changes as some of the changes (ie. $20,000 asset write-off) will only be in place until 30 June 2017.

PROPERTY INVESTORS

There have not been any announcements yet, but I suggest you pay close attention to the May 2017 budget, as there have been a number of changes tested out in the public forum. I have summarised some of these below:

1. Change to the CGT tax discount

There is talk of not only reducing the CGT tax discount, but of also abolishing the CGT discount on properties in SMSFs. Pay attention to this as this significantly effects your long-term investment decisions. After the budget, I have decided to offer all of our clients a free half-hour consultation with our financial planning team to incorporate significant changes into a long-term financial planning strategy.

2. Changes to Negative Gearing

Nothing in concrete yet, although we know the Labor party wants to limit negative gearing to new purchases. The sad thing about these changes is that they will hardly improve the budget as net property losses have dropped from $13.285 billion in 2011 to just under $4 billion last financial year. With low interest rates, negative gearing abolition would no doubt cause more problems than it solves, particularly in regards to increased rents and a possible dip in property prices which would make all Australians feel a little poorer.

3.Product Ruling

PR 2015/2 enables a series of loans to be put in place for 2-years which effectively allows a reduced rate on your home loan (the loan can be as low as 0.5% above the RBA cash rate) and having increased investment property investment loan rates equal to 3.5% above the RBA cash rate. The benefit is limited to the first 2-years of the loan and you need to ensure that the facility isn’t a linked or split loan facility as per TR2892.