2015-16 Federal Budget | Jobs, Growth and Opportunity

2015-16 Federal Budget | Jobs, Growth and Opportunity

13 May 2015

Federal Treasurer, Joe Hockey, last night delivered the Coalition Government’s second budget and in contrast to the last budget there are actually a few surprises this year. From a taxation point of view, the budget contained some significant changes, although ‘big ticket’ tax reform measures remain for consideration in the Tax Reform Discussion Paper.

The 2015-16 budget focuses on encouraging growth in small business, and the service sector, and supporting families with incentives for the second income earner. The budget is also a win for primary producers with tax breaks for farmers and additional funding in loan schemes.

The estimate is for a $35.1 billion deficit in 2015-16 with further reductions each year over the forward estimates with a $6.9 billion deficit predicted for 2018-19.


Tax relief for small business

Small business was front and centre in this year’s budget with the government announcing $5 billion in tax relief for small business entities with an annual turnover below $2 million.

  • From 1 July 2015, small companies will have their tax rate lowered from 30% to 28.5%. Note the current maximum franking credit rate will remain unchanged at 30% for all companies.
  • A 5% tax discount will be given on income from unincorporated small business activity from the 2015-16 income year. This will be provided in the form of a tax offset and capped at $1,000 per individual.
  • Immediately following the budget announcement and until 30 June 2017, small businesses can claim an immediate tax deduction for most assets purchased up to the value of $20,000.
  • The current “lock out” laws for simplified depreciation will be suspended until 30 June 2017, so if you previously chose to cease Small Business Entity (SBE) depreciation you can opt back in without needing to wait for five years.
  • All small business work-related portable electronic devices will be Fringe Benefit Tax (FBT) exempt from 1 April 2016.
  • Small business will benefit from a new capital gains tax rollover relief when changing their legal structures from the 2016-17 year. 

Immediate deduction for business establishment costs

From the 2015-16 income year the government will allow businesses to immediately deduct a range of professional, legal and accounting expenses associated with starting a new business.   

Individuals and Families

Paid parental leave

From 1 July 2016, the government will be cracking down on paid parental leave with the double dipping from the scheme to be removed. This means that parents will no longer be allowed to access the taxpayer-funded paid parental leave scheme if their employer offers its own paid leave scheme.

Child care

The government announced on Mother’s Day its $3.5 billion investment into childcare with a new child care subsidy to be introduced from 1 July 2017. Families meeting the activity test (both parents must do a minimum of eight hours per fortnight of work, study or training to qualify) with annual incomes up to $60,000 will be eligible for a subsidy of 85% of the actual fee paid up to an hourly cap fee. The subsidy will then taper to 50% for eligible families with annual income of $165,000. Families earning $180,000 or more will have a $10,000 annual cap on the total amount of assistance provided per child per year.

Medicare Levy

For the 2014-15 income year the Medicare Levy low income threshold will increase slightly. For couples with no children the threshold will increase to $35,261 and the additional amount of threshold for each dependent child or student will increase to $3,238. The threshold for singles will increase to $20,896 and $33,044 for single seniors and pensioners for the 2014/15 income year.

Immunisation requirements

From 1 January 2016 children will need to fully meet immunisation requirements before their families can access certain government payments (namely subsidised child care and Family Tax Benefit (FTB) Part A end of year supplements). Exemptions will only apply to this requirement for medical reasons.

Family Tax Benefit Part A

Family Tax Benefit (FTB) Part A large family supplement will cease from 1 July 2016. The FTB Part A will be limited to six weeks in a 12 month period while they are overseas from 1 January 2016.

Goods and Services Tax (GST)

People who buy movies, music, games and e-books online will be hit with an extra 10%, with the government vowing to extend the GST to these intangible digital products imported by consumers from 1 July 2017. 

Fringe Benefits Tax (FBT)

In previous years, some employees for not-for-profit organisations have been able to salary package excessive amounts of benefits that are not available to other taxpayers.  These “meal entertainment” and “entertainment facility leasing expense” benefits include holidays, cruises, weddings and meals and alcohol in restaurants.

These benefits are currently not capped and are not reportable fringe benefits. From 1 April 2016 these benefits will now be subject to a new grossed up exemption cap of $5,000, will become reportable fringe benefits, and the excess counted towards their existing FBT exemption or rebate cap.

Residency rules for temporary workers and holiday makers

Residency rules will be changed from 1 July 2016 to ensure that most people who are temporarily in Australia for a working holiday will be treated as non-residents for tax purposes, regardless of how long they are here.

Work related car expenses

From the 2015-16 income year there will be a change to the methods of claiming work related car expense deductions. The 12% cost and one third actual expense methods will be removed, while the cents per kilometre method will be changed by replacing the current three rates with a single rate of 66c per kilometre to all motor vehicles.

Higher Education Loan Program (HELP)

From the 2016-17 year new arrangements will require debtors living overseas for six months or more to make repayments of their HELP debt if their worldwide income exceeds the minimum repayment threshold at the same repayment rates and debtors in Australia.


Whilst there are no changes to the taxes on superannuation, from 1 July 2015 the government will extend access to superannuation for people with a terminal medical condition with the extension relating to the time period. Currently superanuation can only be assessed where they are likely to die within one year. This period is being extended to two years.

Age Pension

Announced late last week, the government has proposed changes to age pension eligibility based on the value of assets that you hold outside the family home. The value of assets you can have in addition to your family home to qualify for a full pension would increase from $202,000 to $250,000 for a single homeowner and from $286,500 to $375,000 for couples who are homeowners. The assets test threshold for non-homeowners will be increased to $200,000 more than homeowner pensioners, i.e. $450,000 (single) and $575,000 (couple).

However, the assets test taper rate at which the Age Pension begins to phase out will be increased from $1.50 of pension per fortnight to $3.00 of pension for each $1,000 of assets over the relevant assets test threshold. This means that the maximum value of assets that a homeowner couple can hold to qualify for a part pension will be reduced from $1.151 million to approximately $823,000 (or $547,000 for a single homeowner instead of the current $775,500.)


One of the few surprises in the budget was the primary production measures (only available to primary producers). For income years commencing on or after 1 July 2016 the following concessions will be available to primary producers:

  • An immediate deduction will be available for all water facilities.
  • An immediate deduction will be available for the cost of fencing.
  • Fodder storage assets will be able to be depreciated over three years.

Along with this, the government will invest a further $250 million to continue the Drought Concessional Loan Scheme and Drought Recovery Concessional Loan Scheme for an additional year. Another $45 million will be provided from 2015-16 to assist farmers to reduce the impact of pest animals in affected areas.

If you have specific questions about how the 2015-16 budget may impact you or your business, please speak with your local Boyce director.

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