SMALL BUSINESS INSTANT ASSET WRITE OFF
The Government will extend the current instant asset write-off ($20,000 threshold) for small business entities (SBEs) by 12 months to 30 June 2018.
A small business entity if a company in 2017/2018 is an entity with a turnover less than $25M or if a trust less than $5M (don’t get me started on the company versus trust anomaly).
The Government will increase the Medicare levy to 2.5% from 1 July 2019 (up 0.5% from the current 2% Medicare levy) to ensure the National Disability Insurance Scheme (NDIS) is fully funded and to guarantee Medicare. Other tax rates that are linked to the top personal tax rate, such as the FBT rate, will also be increased – necessary.
For the 2016-17 income year, the Medicare levy low-income threshold for singles will be increased to $21,655 (up from $21,335 for 2015-16). For couples with no children, the family income threshold will be increased to $36,541 (up from $36,001 for 2015-16). The additional amount of threshold for each dependent child or student will be increased to $3,356 (up from $3,306) – hopefully you’re not in this category.
HELP REPAYMENT THRESHOLD AND RATE
The 2017-18 Budget confirmed the setting of the minimum repayment threshold at $42,000 from 1 July 2018 with a lower 1% repayment rate, and a maximum threshold of $119,882 with a repayment rate of 10% – fair enough (unless you’re a single mum).
MAJOR BANK LEVY FROM 1 JULY 2017
What else is there to write that hasn’t been written – I assume you know it will be passed on if you’re with a big four.
TAXABLE PAYMENTS REPORTING
The Government will extend the taxable payments reporting system (TPRS) to contractors in the courier and cleaning industries – this extends from what’s in place in the building and construction industry.
POS SUPPRESSION TECHNOLOGY
The Government intends to prohibit the manufacture, distribution, possession, use or sale of electronic point of sale (POS) sales suppression technology and software – you really shouldn’t use this software in the first place.
GST TREATMENT OF DIGITAL CURRENCY
The Government will align the GST treatment of digital currency with money (bitcoin) – the former treatment was ridiculous and too hard to explain and should be applied to trade exchanges as well (e.g. Bartercard).
GST REMITTANCE CHANGE TO SUBDIVISIONS
Purchasers of newly constructed residential properties (or new subdivisions) will be required to remit the GST directly to the Tax Office as part of settlement.
Currently, GST is included in the purchase price and it is the developer who remits any GST. However, some developers are failing to remit the GST (despite having claimed GST credits on their construction costs). Your solicitor on settlement will address this.
PLANT & EQUIPMENT DEPRECIATION CHANGES
From 1 July 2017, the Government will limit “plant and equipment” depreciation deductions to outlays actually incurred by investors in residential real estate properties. If you buy an existing property (not new) you can only claim the special building write off, there will be no depreciation deduction on previously installed depreciable assets, they’ll just form part of the costs base.
TRAVEL EXPENSES ON RENTAL PROPERTIES
Travel expenses related to inspecting, maintaining or collecting rent for a residential rental property will be disallowed from 1 July 2017 – this is what happens when too many taxpayers rout the deduction.
CGT DISCOUNT CHANGE TO AFFORDABLE HOUSING
From 1 January 2018, the CGT discount for individuals will be increased from 50% to 60% for gains relating to investments in qualifying affordable housing – there’s no detail on this yet but if you have a NRAS property you’ll probably get this discount (but there may be no gain to discount).
FOREIGN RESIDENTS CGT CHANGES
Australia’s foreign resident capital gains tax regime will be extended by:
- denying foreign and temporary tax residents access to the CGT main residence exemption from 7:30 pm (AEST) on 9 May 2017 (with existing holdings being grandfathered until 30 June 2019);
- increasing the CGT withholding rate for foreign tax residents from 10% to 12.5% from 1 July 2017; and
- reducing the CGT withholding threshold for foreign tax residents from $2m to $750,000 from 1 July 2017. Lots of people don’t know about this but your solicitor on settlement should address it for you.
SUPER BORROWINGS – LRBA INTEGRITY MEASURE FOR PENSION CAP
As an integrity measure, the use of limited recourse borrowing arrangements (LRBAs) by superannuation will be included in a member’s total superannuation balance and for the purposes of the $1.6m pension transfer balance cap from 1 July 2017.
ADDITIONAL SUPERANNUATION CONTRIBUTIONS FOR DOWNSIZING
The Government will allow a person aged 65 or over to make a non-concessional contribution of up to $300,000 from the proceeds of selling their home from 1 July 2018. These contributions will be in addition to those currently permitted under existing rules and caps and they will be exempt from the existing age test, work test and the $1.6m total superannuation balance test for making non-concessional contributions (which applies from 1 July 2017).
ACCESS TO SUPER FOR FIRST HOME BUYERS
The Government will encourage home ownership by allowing future voluntary contributions to superannuation made by first home buyers from 1 July 2017 to be withdrawn for a first home deposit, along with associated deemed earnings.
Concessional contributions and earnings that are withdrawn will be taxed at marginal rates less a 30% offset. Combined with the existing concessional tax treatment of contributions and earnings, this will provide an incentive that will enable first home buyers to build savings more quickly for a home deposit.
Under the measure up to $15,000 per year and $30,000 in total can be contributed, within existing caps.
CROWD SOURCED EQUITY FUNDING
The Government released with the 2017-18 Budget draft legislation to extend crowd-sourced equity funding (CSEF) to proprietary companies. This will open up CSEF for a wider range of businesses and provide additional sources of capital. Note that the Government legislated a CSEF framework for public companies in March 2017.