Wednesday, 7 January 2015

2015: What to expect in the year ahead

As commodity prices fall and emerging and developed economies struggle to grow, Australia’s long run of strong growth might fade in 2015. If it does, we could see moves to change the nation’s tax system to compensate for a falling tax take. Right now, the planned changes to the tax system for individuals and corporations in Australia are incremental, but this could change as more details emerge on the future direction of tax policy.

Corporate and business

In Australia, 2015 will see continued moves towards trying to develop a so-called ‘Google tax’ on multinational companies to stop them shifting billions of dollars of profits offshore in efforts to minimise their tax bills. Such a tax is also being examined or introduced in other countries including the UK.

Treasurer Joe Hockey said that the Australian Tax Office is currently “embedded in the offices” of 10 multinationals in an effort to work out whether they were paying a fair amount of tax. The target is to secure an extra $1 billion in revenue over the next three years from the clampdown.

Key dates for 2015

  • The company tax rate will fall by 1.5 per cent from 1 July 2015. We will also see the introduction of the paid parental leave levy.
  • Fringe benefits tax will be increased from 47 per cent to 49 per cent for two years from 1 April 2015. The benefits cap for public benevolent institutions will also be increased.
  • Deferral of the new taxation of managed investment trusts ends 12 months to 1 July 2015.
  • The proposed and then deferred changes to the taxation of managed investment trusts are expected to take effect on 1 July 2015.

Personal tax

The current government remains committed to longer-term tax reform and will continue the development of tax reform options to take to the next election through the previously announced tax white paper process. Further structural changes affecting individuals and businesses are possible, such as increasing the rate of GST or broadening its base.

Key dates for 2015

  • The fringe benefits tax rate will also be temporarily increased from the current rate of 47 per cent to 49 per cent for the two-year period from 1 April 2015 until 31 March 2017.
  • The first home saver accounts (FHSA) scheme will be abolished from 1 July 2015 and will be treated as ordinary bank accounts.
  • The Family Tax Benefit Part B primary earner income limit will be reduced from the current $150,000 to $100,000 from 1 July 2015. Part B payments will also be restricted to families whose youngest child is less than six years of age. The Part A large family supplement will be limited to families with four or more children.

Policy and cross-border taxes

The progress report is expected on G20 proposals to ensure corporate profits should be taxed where economic activities deriving the profits are performed and where value is created, including the G20/OECD Base Erosion and Profit Shifting (BEPS) Action Plan to modernise international tax rules.

Key dates for 2015

  • The international effort to ensure large corporations pay fair taxes continues on 15-16 November 2015 during the G20 meeting under Turkey’s presidency in Antalya.

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