On 12 May 2015, the Bill for the 2015 Federal Budget was read for a second time by the Honourable J. B. Hockey MP, Treasurer of the Commonwealth of Australia.
- Charities – Australian charities and Not for Profits Commission (ACNC) funding continues but reducing
The Budget announces an intention to continue to fund the ACNC.
“On 19 March 2014, the Government introduced the Australian Charities and Not-for-profits Commission (Repeal) (No. 1) Bill 2014. However, the ACNC will continue to operate in its current form whilst the current ACNC Act remains in effect and the programme expenses reflect this.”
However it should be noted that the budget allowances in the forward estimates see the ACNC funding reducing from current levels of circa $15M p.a. every year in the forward estimates (for example by circa $200,000 in 2015/16, a further circa $900,000 in 2016/17 and so on).
- Small Business and “Start-Ups” Focus
The Budget introduces a number of reforms that will assist Small Businesses (i.e. businesses with an aggregated annual turnover of less than $2 million) in the conduct of their activities.
In particular, we note the following note-worthy reforms (without limitation):
- A 1.5% tax cut (i.e. from 30% tax p.a. to 28.5% tax p.a.) for small business companies (i.e. Proprietary Limited companies);
- Up to a 5% tax cut for unincorporated small businesses (e.g. partnerships), subject to particular conditions being met.
- Immediate deductibility (as opposed to depreciation over a number of years) for small businesses on every asset costing less than $20,000.00 (up from $1,000.00), purchased from the 2015 Budget until 30 June 2017.
- Immediate deduction of professional expenses incurred when starting up a business (e.g. legal expenses for establishing a company or a trust structure) rather than deduction over five years.
- A fringe benefits tax (FBT) exemption will be allowed from 1 April 2016 for small businesses that provide employees with more than one qualifying work-related portable electronic device, even where the items have substantially similar functions (as opposed to its current form where devices have to perform substantially different functions).
- CGT-rollover relief for small businesses changing their legal structure but keeping the same owners.
These improvements will greatly help small businesses that are currently operating, and entice investors and entrepreneurs to engage with “start-ups”.
- Tax “Crackdowns”
A number of changes proposed within the budget had implications on individuals and companies, locally and internationally. These includes (without limitation):
- Goods and Service Tax (GST) rules are proposed to be amended to apply to digital products and services imported by Australian consumers. Prior to these amendments, overseas businesses would not pay GST unless their supply was performed in Australia.
- Multinational Anti-Avoidance law to be introduced, which will “crackdown” on large companies using complex structures to “avoid a taxable presence in Australia.” Significant penalties are proposed, which include an additional penalty of up to 100% of the unpaid tax and interest.
- The GST Compliance Programme will be extended for three years to assist with the Australian Tax Office (“the ATO”) identifying “fraudulent GST refunds, under reporting of GST liabilities, failure to lodge GST returns and outstanding GST debts”.
- The ATO will be given responsibility for regulating foreign investment into real estate, which will likely include more active enforcement and audits. Stricter penalties and fees are also proposed.
- From 1 April 2016, a reduced cap of $5,000.00 on “meal entertainment” fringe benefits for Not-For-Profit Employees will apply. “Meal entertainment” fringe benefits will also be changed to a reportable fringe benefit.
The above “crackdowns” should give for-profits and not-for-profits cause to pause and reflect on their financial circumstances, and ensure that they are “above the board” in relation to the taxation affairs.
- Impact on Family Law
There were two (2) key measures announced in the Budget which may impact the Family Law jurisdiction as follows:
- The formation of a single administrative body, by merging the corporate functions of the Family Court of Australia and the Federal Circuit Court of Australia with the Federal Court of Australia from 1 July 2016. While this reform is subject to legislative change, it is proposed that the functional and judicial independence of the three (3) courts will be “preserved;” and
- Unspecified changes in Court Fees from 1 July 2015, to raise $87.4million over the next four (4) years. The Attorney-General has said that these measures are “…essential to ensuring the Courts’ sustainability and meeting the Government’s election commitment of streamlining Family Court processes.”
Additionally, there were other measures, including:
- $33.7million over the next five (5) years from 2014-15 to establish an Intercountry Adoption Support Service;
- An additional $22.5million over the next four (4) years to the Federal Court of Australia, the Family Court of Australia and the Federal Circuit Court of Australia “…to strengthen their financial positions and enhance their capacity to provide services.”
- $16.7million over the next three (3) years from 2015-16 on a National Awareness Campaign focused on reducing family violence against women and children (part of a joint COAG Agreement for a $30million campaign);
- $17.2million savings by ceasing the “Stronger Relationships Trial” from 9 February 2015; and
- No new increase or decrease to legal aid funding.
Click here for further detailed information about the 2015/16 Budget.
We will provide further updates if and when they become available in due course.
 Australian Taxation Office Budget Announcements Program 1.5
 Australian Taxation Office Budget Announcements – Table 2.7