Home > Tax Changes 2013: Unlucky for Some? RSM Bird Cameron's advice on the planned MRRT tax changes

Tax Changes 2013: Unlucky for Some? RSM Bird Cameron's advice on the planned MRRT tax changes


The Federal Government recently released draft legislation for public consultation to repeal the Minerals Resource Rent Tax (MRRT), along with repealing or deferring other associated tax measures. 

According to Rami Brass, director tax, RSM Bird Cameron, while the removal of concessions such as the loss carry back and accelerated small business depreciation rules are disappointing, the deferred start date of these measures provides taxpayers with a tax planning opportunity. 

RSM Bird Cameron has outlined four measures from the draft bill, along with the proposed start date and potential planning opportunities. 

1. The MRRT will be repealed from 1 July 2014, requiring taxpayers to lodge MRRT returns (and pay any associated MRRT liability) for the years ended 30 June 2013 and 30 June 2014. 

RSM Bird Cameron tip: 

Taxpayers who are affected by the MRRT may wish to bring forward into the 30 June 2014 year any expenditure that will be deductible for MRRT purposes. Such expenditure will remain deductible for income tax purposes (either as general business expenses or under the capital allowance rules) regardless of when incurred. However, the MRRT benefits will be lost for expenditure incurred after 30 June 2014. 

2. The carry back loss rules will be repealed for income years starting on 1 July 2013. The rules will effectively only be in place for the year ended 30 June 2013, or the substituted accounting period in lieu of 30 June 2013. These rules allow businesses that incurred a tax loss in the 2013 tax year to receive an offset of tax paid in the 2012 year, subject to certain eligibility criteria. 

RSM Bird Cameron tip: 

While the effective start date of 1 July 2013 has curtailed detailed tax planning opportunities, taxpayers who may be eligible for the offset should make sure that all income and expenses are reviewed thoroughly to ensure the maximum allowable offset is claimed in the 2013 return. 

3. The small business accelerated depreciation rules will be revoked from 1 January 2014, with the exception of the low-value pool low balance write-off, which will be extended for the full 30 June 2014 year. 

Eligible small business taxpayers can currently claim an immediate deduction for assets costing less than $6,500. This will revert to a threshold of $1,000 for assets that are first installed and ready for use on or after 1 January 2014. If the value of a small business entity’s low-value pool is less than $6,500 at the end of the income tax year, the small business can write off the balance at year end. This will revert to a balance threshold of $1,000 for the 30 June 2015 year. 

A small business entity can currently deduct the first $5,000 of a motor vehicle, plus 15% of the remaining cost in the income year it is first installed and ready for use. This will revert to the usual depreciation or small business pool depreciation rules for assets first installed and ready for use on or after 1 January 2014. 

RSM Bird Cameron tip: 

Eligible small business taxpayers should consider bringing forward capital expenditure and ensuring new assets are installed and ready for use on or before 31 December 2013 to ensure depreciation deductions are maximised in the 2014 tax year. 

4. The Superannuation Guarantee charge percentage increase from 9.25% to 9.5% will be deferred until 1 July 2016 and will then gradually increase by half a percentage point until it reaches 12% for years starting on or after 1 July 2021. 

RSM Bird Cameron tip: 

Businesses should make sure payroll systems are updated in respect of the deferral of the increase to 9.5%.

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