Axing the Mining Tax – how will it affect you?

The new government has made no secret of the fact they want to axe the mining tax.

The repealing of the mining tax would also see the scrapping of separate measures funded by it such as the Schoolkids Bonus, superannuation concessions and small business tax concessions. So far the Labour Party is not budging on its opposition to repeal the mining tax, but if the Coalition's bill passes, we can expect the following changes which will affect many individuals and small businesses:

Income support bonus (ISB)

The ISB which is currently paid twice a year to certain social security recipients will be removed.

School kids bonus (SKB)

This tax-free bonus payment will be removed.

Immediate deductions reduced for small business entities (SBEs)

Currently, small business entities (generally entities with a turnover of less than $2m) can claim an immediate deduction for depreciating assets costing less than $6,500. This threshold will drop to $1,000.

$5,000 deduction for motor vehicles scrapped

The $5,000 immediate deduction for motor vehicles purchased by small business entities will be removed.

Loss carry back measures

The loss carry-back measures were introduced to enable companies to offset tax they have paid in previous years against current year losses. The repeal of this measure would mean Companies will only be able to use the loss carry-back measures for the 2013 income year. The rules will be repealed from the start of the 2014 income year.

Superannuation guarantee increase slowed

The new measures will slow the increase with the SG percentage staying at 9.25% for the 2014, 2015 and 2016 financial years. From 1 July 2016, the SG percentage will then rise to 9.5% and then increase by half a percentage point each year until it reaches 12% for years starting on or after 1 July 2021.

Low income super contribution

The Government plans to remove the rules that currently allow the contributions tax paid on concessional contributions for individuals earning up to $37,000 to be returned. The changes will apply to concessional contributions for financial years starting on or after 1 July 2013.