The 2015 Federal Budget will cause endless political arguments, but there’s a more important question for most people: how will it affect the money I take home and the amounts I have to spend on essential services? Here’s what you need to know about HELP repayments, the “Netflix tax”, FBT for mobile devices and more.
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A reminder: many of these changes will be dependent on new legislation to enable it passing through Parliament. With no one party controlling the Senate, that’s far from guaranteed. We’ll update this post as new information emerges.
Tax on digital goods
One of the most heavily-previewed aspects of this year’s budget is the so-called “Netflix tax”: ensuring GST is applied to digital goods purchased from overseas. We may be waiting a while for the detail on this: the government says it is anticipating OECD guidelines on how to implement this before taking action, and those guidelines aren’t expected until the end of the year. Legislation has been drafted but doesn’t offer a lot of detail on how offshore entities will be forced to apply GST, and the rules won’t apply until July 1 2017.
No fringe benefits tax (FBT) on mobile devices
A key quote for technology lovers from treasurer Joe Hockey’s budget speech:
In a further new policy initiative which is just common sense in the digital age, we are abolishing Fringe Benefits Tax on all portable electronic devices used for work, like mobile phones, laptops and tablets.
There are, however, plenty of conditions: the exemption doesn’t kick in until April 1 2016 and only applies to businesses with a turnover under $2 million.
HELP repayments will apply if you work overseas
Currently, if you work overseas there is no obligation to repay any HELP debt you run up studying at university. That loophole will be closed from 1 January 2016, requiring repayments once you hit the repayment threshold (currently $53,345). This approach is already used by a handful of countries (notably the UK and New Zealand) but will be applied more broadly.
No tax-free threshold for working holiday makers
Bad news if you’re working in Australia temporarily: the tax-free threshold will no longer apply. You’ll have to pay 32.5 per cent tax on all your income up to $80,000 (and higher rates on income above that).
Reduced tax rates for small businesses
For unincorporated small businesses with a turnover under $2 million, such as sole traders, there will be a 5 per cent tax discount, capped at $1000 per individual. The discount will apply to business income (as distinct from personal income), and will be delivered as a tax credit when you submit your return. That means it reduces what you’ll owe, but you won’t see the money until at least July 2016.
Small businesses that are incorporated and have a turnover under $2 million will see their tax rate drop from 30 per cent to 28.5 per cent. Both changes are scheduled to kick in from July 1 2015, legislation permitting.
Depreciate any item up to $20,000
Small businesses with less than $2 million in turnover will be allowed to immediately write off any purchase valued at $20,000 or less. Currently, that limit is $1000; any purchase above that has to be depreciated over a number of years. That concession will be in place from July 1 2015 through to the end of the 2016-2017 financial year — that is, two years. There’s no limit to how many items can be deducted under this arrangement, though you’ll need to demonstrate business relevance.
Policies that have been dropped
The highly controversial proposal to force people under 30 to wait up to six months to receive unemployment benefits has been canned. So too have proposals to force a co-payment when visiting doctors. Plans to allow universities free rein in setting fees haven’t officially been cancelled, but it isn’t clear that these have any chance of passing the Senate.
Lifehacker’s Loaded column looks at better ways to manage (and stop worrying about) your money.