What we need to know?
Focus of budget is personal income tax cuts, incentives for small to medium-sized businesses, moves to keep older Australians working for longer and to control the black economy. Below is the budget summary:
Personal Income Tax Measures:
- Increasing the top threshold of the 19% bracket from $37,000 to $41,000 and increasing the LITO from $445 to $645.
- The top threshold of the 32.5% tax bracket will rise from $87,000 to $90,000
- A new, non-refundable tax offset, in addition to the Low Income Tax Offset (LITO), will provide tax relief of up to $530 to low and middle-income earners from 2018/19.
- Deferral of plans to increase the Medicare levy, currently 2% of taxable income, by 0.5%, as proposed in the 2017 budget but not legislated.
Small Business Tax Measures:
- An extension of the $20,000 instant asset write-off for another year, allowing businesses with turnover of up to $10 million a year to claim an immediate deduction for a purchase of below $20,000.
Superannuation Measures:
- Increasing the number of self-managed super fund (SMSF) members from four to six, caps on passive fees on small balance super funds, banning super fund exit fees, and changing the work test for those 65-74 years of age who make voluntary contributions to super.
- The government will stop super funds from forcing people aged less than 25 years with low balances to pay for life insurance policies they did not ask for or need.
- The requirement for SMSF’s to undergo annual audits will be extended to a three yearly cycle for funds with a good compliance and record keeping history (trustees must have a history of 3 consecutive years of clear audit reports, and all documents have been lodged on time).
The black Economy Measures:
- There will be $10,000 limit on cash payments across the economy, to reduce money laundering and tax evasion.
- Employers and contractors who do not meet withholding obligations will be denied tax deductions.
This is a budget summary, for more information or to discuss your individual case please contact us