Welcome to the new tax year

The beginning of a new financial year always brings into effect new tax measures, whether they are changes in tax rates, depreciation rates, etc. The following is a brief update on some of the changes that apply from 1 July.

Of course, this year, we DO have a range of tax cuts that took effect on 1 July. These will provide tax cuts to varying degrees. The following table shows the new tax rates that apply from 1 July.

Superannuation support

In addition, new regulations have recently been made that SMEs need to be aware of, especially as they concern superannuation payments for employees that apply from 1 July, 2009.

The Superannuation Guarantee (Administration) Amendment Regulations 2009 clarify that employers are not required to provide superannuation guarantee contributions (ie the 9% compulsory super payment) in respect of paid parental leave and ancillary leave payments made to their employees.

This covers paid parental leave, whether under current awards or agreements, or under any statutory paid parental leave scheme. Parental leave includes maternity leave, early paid leave relating to an inability to be transferred to a safe job, paternity leave and other leave taken by partners at the time of birth or adoption of children, pre-adoption leave and adoption leave.

Under the regulations, the 9% compulsory super payment is also not required for payments for service with the Defence Force Reserves, and payments for eligible community service activity (as defined in the Fair Work Act 2009). Eligible community service includes jury service.

Note that the 1 July, 2009 commencement date of the regulations coincides with the kick-in date of the ATO’s Superannuation Guarantee Ruling SGR 2009/2, which explains the Tax Commissioner’s view on the meaning of ‘ordinary time earnings’ and ‘salary or wages’ – see my 25 June article The ATO’s new Super Guarantee rules explained.

Depreciation of assets

Assets of a business can be depreciated (or written off) at varying annual percentages depending on what’s known as their effective lives.

Each year, the Tax Office updates its major tax ruling on the effective life of depreciating assets. With effect from 1 July 2009, Taxation Ruling TR 2009/4 contains the rates applicable. The ruling contains consolidated tables that list a huge range of assets and the depreciation rates applicable.

With effect from 1 July, 2009, the Commissioner has determined new effective life rates for a variety of assets including:

Soft drink manufacturing assets eg:

• Bag, carbon and cartridge filters – 15 year effective life.
• Induction sealers – 10 year effective life.
• Bottle and can rinsing machines – 20 year effective life.
• Shrink wrappers – 15 year effective life.

Glass and glass product manufacturing eg:

• Automotive laminated glass product inspection assets – 15 year effective life.
• Laminated glass cutting tables – 10 year effective life.

Automotive smash repair assets eg:

• Hoists – 20 year effective life.
• Buffing machines – three year effective life.
• Infrared paint dryers/Heating arches – 20 year effective life.
• Spray bake ovens – 12 year effective life.

SMEs might also note that, for the financial year that commenced on 1 July, 2009, the car depreciation limit remains the same as the previous year at $57,180.

Travel and meal allowances

Each year, the Tax Commissioner releases details of the amounts he considers reasonable (so that deductions claimed up to those amounts do not need to be substantiated, although the expense must still be incurred) for various expenses such as overtime allowances and travel allowances.

For the 2009-10 income year that started on 1 July, 2009, Taxation Determination TD 2009/15 contains the new rates. In relation to claims made for:

• Overtime meal allowance expenses – The reasonable amount is $24.95.
• Domestic travel allowance expenses – The reasonable amounts are given for accommodation at daily rates (for domestic travel only), meals (showing breakfast, lunch and dinner), and deductible expenses incidental to travel, for various salary levels.

Travel allowance expenses for employee truck drivers:

• For salaries of $93,600 and below, the reasonable amount for food and drink is $82.05 per day ($19.95 for breakfast, $22.80 for lunch, $39.30 for dinner).
• For salaries of $93,601 and above, the reasonable amount for food and drink is $89.50 per day ($22.30 for breakfast, $22.80 for lunch, $44.40 for dinner).

Terry Hayes is the senior tax writer at Thomson Reuters, a leading Australian provider of tax, accounting and legal information solutions.