Explanatory Memorandum
(Circulated By Authority of the Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)General outline and financial impact
Abolish the entrepreneurs' tax offset
Schedule 1 to this Bill repeals 'Subdivision 61-J - 25% entrepreneurs' tax offset' of the Income Tax Assessment Act 1997 , abolishing the entrepreneurs' tax offset.
Date of effect: This measure applies for the 2012-13 income year and later income years.
Proposal announced: This measure was announced in the Deputy Prime Minister and Treasurer's Media Release No. 045 of 8 May 2011.
Financial impact: This measure will have a revenue gain of $365 million over the forward estimates period.
| 2011-12 | 2012-13 | 2013-14 | 2014-15 |
| Nil | Nil | $180m | $185m |
Compliance cost impact: Nil to low.
Increase to the small business instant asset write-off threshold and simplified depreciation
Schedule 2 to this Bill amends the Income Tax Assessment Act 1997 by:
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- increasing the small business instant asset write-off threshold from $1,000 to $6,500; and
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- consolidating the long life small business pool and the general small business pool into a single pool to be written off at one rate.
Date of effect: Part 1 of Schedule 2 - the increase in the instant asset write-off threshold from $1,000 to $5,000 and the simplified pooling arrangements - commences on the later day of Royal Assent of the Bills giving effect to the Minerals Resource Rent Tax and of Royal Assent of this Tax Laws Amendment (Stronger, Fairer, Simpler and Other Measures) Bill 2011.
Part 2 of Schedule 2 - the increase in the instant asset write-off threshold from $5,000 to $6,500 will commence after the commencement of Part 1of Schedule 2 to this Tax Laws Amendment (Stronger, Fairer, Simpler and Other Measures) Bill 2011 and Royal Assent of the Clean Energy Bill 2011.
Proposal announced: The increase in the instant asset write-off threshold to $5,000 and the simplified depreciation rules were jointly announced by the then Prime Minister and the Treasurer in the Treasurer's Media Release No. 028 of 2 May 2010. The further increase in the instant asset write-off threshold from $5,000 to $6,500 was jointly announced by the Deputy Prime Minister and Treasurer, the Minister for Climate Change and Energy Efficiency and the Minister for Small Business in the Deputy Prime Minister and Treasurer's Media Release No. 077 of 10 July 2011.
Financial impact: This measure will have the following revenue impact:
| 2011-12 | 2012-13 | 2013-14 | 2014-15 |
| Nil | Nil | -$1,160m | -$1,140m |
Compliance cost impact: Low. This measure will simplify existing practice. There is no ongoing compliance cost impact and a minimal transitional impact, reflecting the need for some taxpayers to be aware of the amendment.
Small business entities' deductions for motor vehicles
Schedule 3 to this Bill amends the Income Tax Assessment Act 1997 to allow small business entities to claim an accelerated initial deduction for motor vehicles acquired in the 2012-13 and subsequent income years.
Date of effect: These amendments will commence on the day this Bill receives Royal Assent.
Proposal announced: This measure was jointly announced by the Deputy Prime Minister and Treasurer, the Assistant Treasurer and Minister for Financial Services and Superannuation and the Minister for Small Business in the Deputy Prime Minister and Treasurer's Media Release No. 049 of 10 May 2011.
Financial impact: This measure will have the following revenue impact:
| 2011-12 | 2012-13 | 2013-14 | 2014-15 |
| Nil | Nil | -$200m | -$150m |
Compliance cost impact: Low. Taxpayers already depreciate motor vehicles under existing practice. This will bring forward the depreciation benefits, meaning there is no ongoing compliance cost impact and a minimal transitional impact.
Low income superannuation contribution
Schedule 4 to this Bill amends the Superannuation (Government Co-Contribution for Low Income Earners) Act 2003 to provide for the low income superannuation contribution.
Date of effect: These amendments apply to the eligible concessional contributions of an individual for a year starting on 1 July 2012. These amendments are dependent on the passing of the Minerals Resource Rent Tax package.
Proposal announced: This measure was announced as part of Stronger, Fairer, Simpler: A tax plan for our future in the Treasurer's and the then Prime Minister's joint Media Release No. 028 of 2 May 2010.
Financial Impact: This measure will have the following implications on the underlying cash balance:
| 2011-12 | 2012-13 | 2013-14 | 2014-15 |
| -$0.7m | -$19.6m | -$892.4m | -$975.6m |
Compliance cost impact: Minimal.