subscribe to our newsletter
Small business warned on Budget measure abuse

Small business warned on Budget measure abuse

Reporter
18 May 2015

Chartered Accountants Australia and New Zealand (CAANZ) has sounded a note of caution to those thinking of immediately buying new assets based on the Budget's instant asset deduction for small businesses, announced last week.

In Tuesday's Budget speech, the Treasurer announced that businesses with a turnover of less than $2 million can immediately deduct most assets acquired and installed for less than $20,000.

However, Michael Croker, tax leader at Chartered Accountants ANZ, said “the income tax law has had these types of concessions before, although not as generous".

"CAs know from experience that clients get the best outcomes when they take a little while to plan how best to respond," he said.

Mr Croker also warned that the Australian Taxation Office would be monitoring carefully how taxpayers respond to the new tax concession.

“$20,000 is a lot of money to deduct for each item acquired, and the ATO’s job is to ensure that only genuine eligible small businesses get the concession. Taxpayers don’t always appreciate the huge amount of data the ATO collects to monitor business spending patterns,” he said.

Mr Croker’s comments come after tax accounting group H&R Block issued a statement warning of potential “traps” in the federal Budget's tax breaks.

In a statement, CAANZ highlighted key areas which the group believes the ATO will be monitoring, including:

• Falsely representing that annual turnover is under $2 million

• Breaking down one large purchase into multiple purchases of less than $20,000

• Bringing pre-Budget equipment purchase contracts into the post-Budget eligibility period

• False invoicing

• Quoting a false Australian Business Number

• Non-business taxpayers misrepresenting their eligibility for an Australian Business Number

• Buying equipment for personal or home use, not for business use

• Private buyers giving funds to small business taxpayers, asking them to buy equipment on their behalf.

Mr Croker said these types of evasion practices are not new, but the Budget announcement could encourage some to think about making such arrangements.

“Don’t do dodgy tax deals. The ATO will rightly impose substantial penalties for such behaviour,” Mr Croker said.

Small business warned on Budget measure abuse
smsfadviser logo
join the discussion

What do you plan to do in response to the new adviser education standards?

SUBSCRIBE TO THE
SMSF ADVISER BULLETIN

Get the latest news and opinions delivered to your inbox each morning

In this month's issue:

  • Time wrap
  • The tech bull run
  • From hobby to passion
  • Golden Years
  • An untimely reminder
  • Why change is so difficult
  • Key Strategies for equalising super