More help for drought-affected farmers
As part of the next phase of its drought assistance
policy (which includes various other measures),
the Government announced that farmers will be
able to immediately deduct the cost of fodder
Previously, these types of assets (such as silos and hay sheds used to store grain and other animal feed storage) were required to be depreciated over three years.
This measure is designed to make it easier for farmers to invest in more infrastructure to stockpile fodder during the drought.
This measure is available for fodder storage assets first used, or installed ready for use, from 19 August 2018 (being the date of the announcement), and complements the $20,000 instant write-off already available to small business entities.
Editor: The relevant legislation giving effect to this announcement was fast-tracked through Parliament to provide certainty for these droughtstricken farmers, passing both Houses on 20 September 2018.
Increase in Private Health Insurance excesses
Legislation has been passed by Parliament to
implement the Private Health Insurance (‘PHI’)
reforms announced by the Government in October
The measures are designed to simplify PHI and make it more affordable for consumers by improving the value of PHI either in the form of lower premiums and/or improved cover for certain benefits.
Of particular interest from a tax perspective is the increase in the maximum voluntary excess levels for products providing individuals with an exemption from the Medicare levy surcharge.
The increased levels of voluntary excesses that insurers can apply are:
- $750 (up from $500) in any 12-month period for singles; or
- $1,500 (up from $1,000) in any 12-month period for couples/families.
These increases will apply from the 2019 income year, with private health insurers permitted to offer products with the new higher excesses from 1 April 2019. Editor: This is a positive change, as the excess levels have not changed since 2000. Whilst there is no requirement for consumers to move to products with higher excesses, it is expected that more affordable PHI will encourage more people to take out cover
Legislation to combat illegal phoenix activity
The Government has announced a package of
reforms to tackle illegal phoenix behaviour.
By way of background, phoenixing occurs when the controllers of a company strip the company's assets and transfer them to another company, to avoid paying the original company's debts.
The proposed measures will deter and disrupt the core behaviours of phoenix operators by:
- creating new criminal and civil offences, attaching the highest penalties available under the law, to target those who engage in and facilitate illegal phoenix transactions;
- preventing directors from backdating their resignations to avoid personal liability;
- preventing sole directors from resigning and leaving a company as an empty corporate shell with no directors;
- restricting the voting rights of related creditors of the phoenix company at meetings regarding the appointment or removal and replacement of a liquidator;
- making directors personally liable for GST liabilities, as part of extended director penalty provisions; and
- extending the ATO's existing power to retain refunds where there are outstanding tax lodgments.
A new Phoenix Hotline is also being established,
which will make it easier to report suspected
Editor: According to the Government, the proposed measures are tightly targeted at those who misuse the corporate form, while minimising any unintended impacts on legitimate business restructuring. Whether they will be able to achieve this goal or not is yet to be seen…
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.