Federal Budget 2011-12 and Changes for Business

The 2011-12 federal budget made a couple of significant changes.

Scale back of FBT concessions on company cars

The Government proposes changes to fringe benefits tax, which are intended to remove the current incentive for people to drive salary‑sacrificed and employer‑provided cars and to increase their tax concession. The measure is set to replace the current 'statutory formula' method for determining the taxable value of car fringe benefits by replacing the statutory rates with a single flat rate of 20 per cent that applies regardless of the distance travelled. This measure will apply to new arrangements entered into after 7:30pm (AEST) on 10 May 2011, and will be phased in over four years.

Under the statutory formula method, the calculated car fringe benefit decreases as the distance travelled by the car increases. This encourages people to drive their vehicle

Abolishing the Entrepreneurs' Tax Offset

The Entrepreneurs’ Tax Offset will be abolished with effect from the 2012‑13 income year.

This does not represent a big tax saving for small businesses but they all add up.
Accelerated initial depreciation deduction for motor vehicles

Small businesses will be allowed to claim up to $5,000 as an immediate deduction for motor vehicles acquired from the 2012‑13 income year. The remainder of the motor vehicle value will be pooled in the general small business pool (depreciated at 15% in the first year and then 30% in later years.

Copyright 2014. My Tax Zone.