The Commonwealth Budget for 2015 focusses on small business incentives and refining tax and social security rules.

It does not address tax reform issues, reduce personal income tax rates or change superannuation laws.

It does not address the Financial System Inquiry recommendations and does not state the government’s position on a bank deposits levy.

From 31 July 2015, the Government will increase Commonwealth penalty units from $170 to $180. Ongoing indexation of penalty units based on the CPI will also be introduced, with indexation occurring on 1 July every three years commencing 1 July 2018.

Small Business package
For Budget purposes small businesses have an annual turnover of less than $2 million.

The changes include:

• incorporated small businesses will have their tax rate reduced to 28.5% (down from 30%)
• unincorporated small businesses will receive a 5 per cent tax discount capped at $1000 a year per individual. The discount will be delivered as a tax credit in their tax return.
• small businesses will receive an immediate tax deduction for every asset purchased up to $20,000 until 30 June 2017.The $20,000 threshold applies to each individual asset and small businesses will be able to apply the $20,000 rule to as many individual assets as they want. Most small capital purchases will be eligible for the new threshold, with the exception of assets that have specific depreciation rules, including in-house software and horticultural plants. See ATO Guidance
• Funds have been allocated to ASIC to implement and monitor a regulatory framework to facilitate the use of crowd-source equity funding. The framework will include simplified reporting and disclosure requirements.
• The Government will allow a FBT exemption from 1 April 2016 for small businesses that provide employees with more than one qualifying work-related portable electronic device, even where the items have substantially similar functions – such as a tablet and a laptop.
• The government will allow small businesses to change the legal structure of their business without incurring a capital gains tax liability, with the government to reform the current arrangements for CGT rollover.

UPDATE: The Bills were passed on 15 June 2015:

• Tax Laws Amendment (Small Business Measures No. 1) Bill 2015
• Tax Laws Amendment (Small Business Measures No. 2) Bill 2015

Tax refinements
Tax changes include:

• The ATO will focus on multi-national corporations minimising tax through artificial arrangements
• The Government proposes to expand the scope of GST so that it applies to cross border supplies of digital products and services (such as streaming or downloading of movies, music and apps, as well as the provision of consultancy and professional services) imported by Australian consumers from 1 July 2017.
• The Government will remove the ‘12 per cent of original value’ and the ‘one-third of actual expenses’ methods of calculating work-related car expense deductions from the 2015-16 income year onwards. The ‘cents per kilometre’ method will be modernised by replacing the three current rates based on engine size with one rate set at 66 cents per kilometre applicable to all motor vehicles. The ‘logbook method’ of calculating expenses will be retained. These changes will not affect leasing and salary sacrifice arrangements.

Social security changes
The Age Pension asset free threshold will be increased from $202,000 to $250,000 for a single homeowner and $375,000 (up from $286,500) for a couple as at 1 January 2017. The assets test taper rate at which the Age Pension begins to phase out will be increased so that the maximum value of assets that a homeowner couple can hold and qualify for a pension will be reduced to $823,000. Single persons who own their own home with assets of more than $547,000 will no longer be eligible.

The amount of defined benefits income (for superannuants receiving a defined benefits income stream) that can be excluded from the income test will be capped at 10% from 1 January 2016

The Government does not intend to proceed with plans to index the Age Pension by CPI.

Pensioners who lose their pension entitlement on 1 January 2017 as a result of these changes will automatically be issued with a Commonwealth Seniors Health Card or a Health Care Card for those under Age Pension age.

There are also changes to child care subsidies and paid parental leave.