Acts of Parliament assented to - Acts No. 66 and 67 of 2015

Overview

The Tax Laws Amendment (Small Business Measures No. 1) Act 2015 and the Tax Laws Amendment (Small Business Measures No. 2) Act 2015, assented to by the Governor-General on 22 June 2015, were enacted to address gaps in the tax laws that potentially disadvantaged small businesses. These Acts, passed by the Australian Parliament, aim to provide relief and support to small businesses through various tax measures. The overarching policy objective is to enhance the economic viability and growth of small businesses by reducing their tax burdens and simplifying their compliance requirements, thereby fostering a more conducive environment for business development and sustainability.

Scope and Application

The Tax Laws Amendment (Small Business Measures No. 1) Act 2015 and the Tax Laws Amendment (Small Business Measures No. 2) Act 2015 collectively aim to amend the law relating to taxation, specifically targeting small business entities and their taxation liabilities. These Acts apply to small business entities as defined under the Corporations Act 2001, which includes companies with an aggregated turnover of less than $10 million. The scope of these Acts extends to the modification of tax laws to alleviate the tax burden on small businesses, including adjustments to the instant asset write-off threshold, changes to the simplified depreciation rules, and other tax concessions designed to support the growth and sustainability of small businesses within Australia. These Acts are applicable across the Commonwealth, affecting businesses nationwide, and are designed to influence the financial strategies of small enterprises by providing them with more favourable tax treatments. While these Acts primarily focus on small businesses, there are specific exclusions and thresholds that determine eligibility for the amended tax treatments, ensuring that the benefits are appropriately targeted. The application and interpretation of these Acts may be further refined or extended through subordinate instruments, which provide additional details and clarifications on the implementation of these legislative changes.

Key Provisions

The Tax Laws Amendment (Small Business Measures No. 1) Act 2015 and the Tax Laws Amendment (Small Business Measures No. 2) Act 2015 introduce several amendments to the law relating to taxation in Australia. Section 2 of each Act provides for the commencement of the amendments, with the provisions coming into effect on 1 July 2015. One of the key changes introduced by these Acts is the extension of the small business entities (SBE) concessions (sections 3 and 4). SBE concessions provide a range of benefits to small businesses, including lower tax rates and simplified depreciation rules. The amendments extend these concessions to businesses with an annual turnover of up to $10 million, up from the previous threshold of $2 million. These Acts impose obligations on small businesses to ensure compliance with the new tax laws. For instance, businesses that qualify as SBE must accurately calculate their taxable income and apply the relevant tax rates (section 5). Additionally, businesses must maintain proper records to substantiate their claims for deductions and other entitlements (section 6). The Acts also require businesses to lodge their tax returns and pay their taxes by the due dates, as stipulated in the Income Tax Assessment Act 1997 (section 7). Failure to comply with the obligations imposed by these Acts may result in civil or criminal penalties. For example, businesses that fail to lodge their tax returns by the due date may be subject to late lodgement penalties (section 8). The penalties are calculated based on the amount of tax unpaid and the length of the delay. Additionally, individuals who intentionally provide false or misleading information to the Australian Taxation Office (ATO) may be subject to criminal prosecution, with a maximum penalty of five years imprisonment (section 9). Businesses that engage in tax evasion or other serious tax offences may also face substantial fines and imprisonment (section 10). It is important for small businesses to understand and comply with the requirements of these Acts to avoid any potential penalties or consequences.