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27 Jun 14 Preamble - 27 June 2014

The Federal Government continues to pursue its commitment to abolish the mining tax in the face of opposition from the current Senate with the Bill having been reintroduced into the House of Representatives on Monday this week. However, the Senate makeup will change next week when the newly elected Senators from the 2013 election take their positions; this may well allow previously blocked legislation to be passed into law.  

In the interim, the failure to abolish the mining tax has implications for the proposed wind-back of certain other measures that have not been passed into law.  These include:

  • The instant asset write-off amount of $6,500 for small businesses – from 1 January 2014, the instant asset write-off will be reduced back to $1,000;
  • The accelerated deprecation for motor vehicles for small businesses – from 1 January 2014, this will no longer be available; and
  • The loss carry-back measure –will only apply for the 2013 income year.

The ATO has offered the following guidance for taxpayers who have relied on these measures:

  • The instant asset write-off amount of $6,500 for small businesses - Taxpayers, including those who use early balancing substituted accounting periods, who lodge a tax return for the 2013-14 income year can self-assess under the existing law. Once the law is enacted, the taxpayer will need to seek an amendment to apply the new law. No tax shortfall penalties will apply and if the amendment is sought within a reasonable time, we will remit any shortfall interest attributable to the amendment to nil. Otherwise the shortfall interest will run from the date the change becomes law.
  • The accelerated deprecation for motor vehicles for small businesses - as above for the instant asset write-off.
  • The loss carry-back measure - Taxpayers, including those who use early balancing substituted accounting periods, who lodge a company tax return for the 2013-14 income year can self-assess under the existing law. Once the law is enacted, the ATO will amend the company tax return to disallow the claim for the loss carry-back tax offset for the 2013-14 income year. This will result in an increase in the taxpayer's tax liability. No tax shortfall penalties will apply and any interest attributable to the shortfall will be remitted to nil. There is further information on the ATO website.

Kind regards

Robert Jeremenko CTA