Small Business Minister Bruce Billson recently announced changes to the PAYG instalment thresholds (see below), meaning many people may no longer have to pay PAYG instalments. The ATO has now advised that, following the Minister’s announcement, the following PAYG instalment threshold changes will apply from 1 July 2014;
- the business or investment income threshold will increase from $2,000 to $4,000. Currently, the ATO requires an individual to pay PAYG instalments if $2,000 or more of gross business or investment (eg dividends or interest) income was reported on their most recent tax return;
- the balance of assessment threshold will increase from $500 to id=”mce_marker”,000. Currently, the ATO requires an individual to pay PAYG instalments if the tax payable on the last assessed tax return was $500 or more;
- the notional tax threshold will increase from $250 to $500. Currently, the ATO requires an individual to pay PAYG instalments if the individual’s notional tax was $250 or more. Notional tax is basically the tax attributable to the taxpayer’s business and investment income for the most recent assessment; and
- the requirement for entities registered for GST to remain in the system even if they have a zero instalment rate will be removed.
[LTN 120, 25/6/14]
Tax changes to support SMEs: Minister for Small Business
The Minister for Small Business, Bruce Billson, on Fri 20.6.2014 addressed the G20 Agenda for Growth: Opportunities for small and medium enterprises conference held in Melbourne. Mr Billson discussed policy initiatives of the Government to reduce “red tape” for small businesses.
In the area of tax compliance, the Minister announced the Government was “working up a measure for reducing compliance costs for taxpayers by $56m per year, by reducing PAYG (instalments) reporting requirements for a range of small businesses.”
- He said around 372,500 small businesses would benefit from administrative changes to PAYG instalment thresholds, and
- around 32,500 small businesses would no longer have to lodge a BAS simply to report their PAYG instalments.
- A further 340,000 small businesses would still be required lodge a BAS, but would no longer have to interact with the PAYG instalment system.
“By simply reviewing thresholds that are more than a decade old, we can cut the red-tape burden which lands most heavily on small business,” Mr Billson said. (Further details of the announcement are contained in the Minister for Small Business’s media release, 20 June 2014.)
Mr Billson also discussed disincentives to SME participants sharing ownership of their business. “The Australian tax system currently imposes taxes on discounts on interests granted under an employee share scheme in the year of issue and many have reasonably argued that these tax arrangements are a disincentive for many start-ups to set up an employee share scheme and are inconsistent and out-of-step with global practice,” he said. The Minister said the Government was “examining ways to address these concerns in the context of the National Industry Investment and Competitiveness Agenda”.
[LTN 117, 20/6/14]