motor vehicle and other tax write-offs

Date of effect: 1 July 2012

Small businesses will be eligible to write -off the first $5,000 of any motor vehicle purchased after 1 July 2012, a significant increase on the current amount of $1,000.

This measure will replace the entrepreneur tax offset. The remainder of the purchase price can be transferred into the general small business depreciation pool, which is depreciated at 15% in the first year and 30% in later years.

single rate for car fringe benefits

Date of effect: 10 May 2011

Changes were made to the way cars are treated under the fringe benefits tax; which will reduce the motivation to drive unnecessarily to receive more  attractive tax treatment.

Currently, multiple statutory rates are used to determine the taxable value of car fringe benefits, which depend on distance travelled. These will be replaced with a single rate of 20%. This measure will apply to new contracts entered into after 7:30pm (AEST) on 10 May 2011 and will be phased in over four years, as follows:

Distance travelled

Current rate

From
10 May 2011

From
1 April 2012

From
1 April 2013

From
1 April 2014

0 – 15,000 km

26%

20%

20%

20%

20%

15,000 – 25,000 km

20%

20%

20%

20%

20%

25,000 – 40,000 km

11%

14%

17%

20%

20%

> 40,000 km>

7%

10%

13%

17%

20%

Comment:
There will be an immediate benefit for employees entering into salary sacrificed motor vehicle arrangements where they travel less than 15,000 km per year, as they’ll gain the benefit of the new rate immediately. Employees on existing contracts who travel more than 25,000 km per year will gradually lose their current advantage over the next three years.

Continue reading the full budget analysis here:

more information?

For more information on how any of these changes may impact your personal situation, please contact us on 07 3833 3999.

The information contained in this Federal Budget Analysis is current as at 11 May 2011 and is prepared by MLC Technical, a division of GWM Adviser Services Limited ABN 96 002 071749, registered office 105-153 Miller Street North Sydney NSW 2060. This company is a Australia Financial Services Licensee and member of the National Australia group of companies. Any advice in this communication has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on any advice, consider whether it is appropriate to your objectives, financial situation and needs.