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Find out what changes have occurred which may affect your business.

Business Tax

Company tax cut and paid parental leave levy

The Government confirmed its intention to reduce the corporate tax rate to 28.5 percent from 1 July 2015. For companies with taxable income in excess of $5 million, this reduction will be offset by a new levy of 1.5 percent which will cover the Government’s paid parental leave scheme.

Along with these changes, the Government has announced that it will reduce the rate of the refundable and non-refundable research and development tax offsets by 1.5 percent from 1 July 2014.

Corporate Tax Rates by Comparison

Country Corporate Tax Rate 2014 (%) Indirect Tax Rate 2014 (%)
United States* 40.0 0
Japan 35.6 8.0
India 34.0 14.0
Australia 30.0 10.0
Germany 29.6 19.0
Canada 26.5 5.0
Brazil 25.0 19.0
China 25.0 25.0
United Kingdom 21.0 20.0
Singapore 17.0 7.0
OECD average 25.3 19.1

*The marginal federal corporate income tax rate on the highest income bracket of corporations is 35 percent. State and local governments may also impose income taxes, generally resulting in a net effective rate if approximately 40 percent.

Managed Investment Trusts (MITs)

The Government remains committed to introducing a new regime for MITs with Exposure Draft legislation to be released for public consultation in June 2014. However, the introduction of the new regime has been deferred to 1 July 2015 to accommodate this consultation and the need for systems changes by the ATO and industry.

Tax Consolidation Changes

A new measure has been announced to ensure consistency between the treatment of securitised assets and associated liabilities in tax consolidation entry and exit scenarios. Transitional rules will apply to arrangements that commenced before 13 May 2014.

Certain tax consolidation integrity measures announced in the 2013-14 Budget (regarding shifting of assets and deductible liabilities) will be deferred to apply to arrangements commencing on or after the original announcement (14 May 2013).

MEC Groups

The Government has decided not to proceed with changes to multiple-entry consolidated (MEC) groups, as announced in the 2013-14 Budget. This decision followed the conclusions of a working group (comprising Treasury, ATO and industry participants), which concluded that there is a limited scope to address differences between MEC and ordinary tax consolidated groups without reconsidering broader international tax policy issues.

Third Party Reporting

Whilst the Government is still committed to enhancing third party reporting to the ATO to enhance taxpayer compliance, the commencement date for certain tax-related information has now been deferred to 1 July 2016 (for real property, shares, units, derivatives, certain government grants/payments and merchant debit/credit services). This follows concerns raised by industry on a recent Treasury discussion paper.

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