The new tax year is now upon us and with it have come some fairly significant changes which commence to take effect from 1 July 2017.
The list of changes, particularly in superannuation rules, is quite extensive so I have chosen to mention just a few which might be of particular interest to the readers of this newsletter.
$20,000 immediate write-0ff
Previous legislation which allowed small business to immediately write off up to $20,000 spent on fixed assets had a sunset of 30 June, 2017 after which the old limit of $1,000 was to be reinstated. The good news is that as announced in this year’s federal budget the concession has been extended for another year.
This is a particularly good concession for small business because it represents a very worthwhile reduction in tax.
The concession does not limit the number of fixed assets which a small business can purchase and claim the deduction for. The only requirement is that the items must be for the business and are not components of a larger more valuable asset.
The rules also enable small business to use the concession to write off any balance of less than $20,000 remaining in a general depreciation pool. General pools are in fact another concession made to small business and provide for accelerated depreciation for capital items which are purchased for a business and which can’t be written off immediately.
This concession is available to small business with an aggregated annual turnover of $10m.
Rental Properties
While there has been much talk in the media about possible removal of negative gearing for rental property investors, the federal government has once again chosen not to go that far.
Instead they have reduced the number of deductions claimable against rental property income.
Specifically travel expenses associated with the need to inspect or repair properties will no longer be claimable. Also for properties purchased after 9 May it will no longer be possible to claim depreciation expense for fixtures and fittings in the property at the time of the purchase.
However for properties purchased up to and including 9 May the previously existing depreciation arrangements will continue until the current owner sells the property or the items are fully depreciated.
From 9 May fixtures and fittings actually purchased for the property by the present owner can be depreciated in the normal way.
These measures will effectively reduce the impact of negative gearing on other taxable income of the property owner.
Other major deductions including repairs and maintenance (with some restrictions), bank interest, Local Government rates and insurance will continue to be deductible.

Superannuation
While there is not enough space in this article to do justice to superannuation changes I will mention a couple which hopefully will be of interest.
Firstly effective from 1 July 2017 the concessional contribution limit to has been reduced to $25,000 for everybody.
Previously the cap was $30,000 per year for people under the age of 49 and $35,000 for people who were 49 and over.
The new $25,000 annual cap will however be indexed in $2,500 increments.
Secondly a completely new measure will allow first home buyers to make concessionally taxed deposits of up to $15,000 per year to a maximum of $30,000 into their super fund.
While these contributions must remain within the concessional contribution limit of $25,000 they can be withdrawn for a first home deposit after 1 July, 2018.
These voluntary deposits will be taxed under the concessional superannuation rules and off-sets will be provided when the funds are withdrawn and taxed at the taxpayers marginal rate.
It remains to be seen whether this scheme will be sufficient to encourage more first home buyers into the market but at least it appears to be a genuine offer to encourage more to do so.

~ Ian Sharpe