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ATO rates and thresholds

The ATO has updated a number of rates and thresholds on their website, including the following.

Division 7A – benchmark interest rate

The Division 7A benchmark interest rate for the 2020 income year is 5.37% (up from the rate for the 2019 income year of 5.20%).

Car cost limit for depreciation

The maximum value taxpayers can use for calculating depreciation of cars is the car limit in the year in which they first used or leased the car.

In the 2019/20 income year, the car limit is $57,581, unchanged from the 2018/19 year.

Example: Applying the car cost limit

In July 2019, Laura buys a car for $60,000 (after any reduction for GST credits entitlements) to use in running her business (being a type of car to which the car limit applies).

When working out the car’s decline in value for the 2019/20 income year, the first element of the cost of the car is reduced to $57,581.

Capital improvement threshold

The improvement threshold for the 2019/20 income year is $153,093, up from $150,386 for the 2018/19 income year.

SMSF LRBA interest rates

An interest rate of 5.94% charged by an SMSF in the 2020 income year under a limited recourse borrowing arrangement (‘LRBA’) to acquire real property would be consistent with the ATO’s safe harbour terms (or 7.94% for listed shares or units).

 

 

For all your tax needs, call your Brisbane accountants on 07 3160 7386.

 

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