Please find some relevant highlights from the Budget 2018.
These are just some of the items that I think are relevant to you. I have also provided some links on Facebook yesterday, they also appear below.
Please call me if you would like to discuss any of the Budget measures.
There are a large number of tax-related measures contained in the Federal Budget handed down on 8 May 2018.
Small business
• Instant write-off – the $20,000 immediate write-off for assets is being extended to 30 June 2019.
The accompanying ‘lock out’ rules for applying the simplified depreciation rules will be suspended to the same date.
Individual taxation
A new low and middle income tax offset (in addition to the LITO) will come from 1 July 2018:
• a benefit of up to $200 for taxpayers with taxable income of $37,000 or less.
• between $37,000 and $48,000, the value of the offset will increase at a rate of three cents per dollar to the maximum benefit of $530.
• between $48,000 to $90,000 the maximum benefit will be $530.
• from $90,001 to $125,333, the offset will phase out at a rate of 1.5 cents per dollar.
The top threshold for cutting in the 32.5% rate will change from 1 July 2018 to $90,000 from $87,000.
From 1 July 2022 Government will:
• increase the LITO from $445 to $645
• extend the 19 per cent personal income tax bracket from $37,000 to $41,000.
• the increased Low Income Tax Offset will be withdrawn at a rate of 6.5 cents per dollar between incomes of $37,000 and $41,000, and at a rate of 1.5 cents per dollar between incomes of $41,000 and $66,667.
• further increase the top threshold of the 32.5 per cent personal income tax bracket from $90,000 to $120,000.
From 1 July 2024 Government will extend the top threshold of the 32.5 per cent personal income tax bracket from $120,000 to $200,000, meaning the top marginal tax rate of 45 per cent will apply to taxable incomes exceeding $200,000 and the 32.5 per cent tax bracket will apply to taxable incomes of $41,001 to $200,000.
Medicare levy thresholds have been retrospectively increased:
• The threshold for singles will be increased from $21,655 to $21,980.
• The family threshold will be increased from $36,541 to $37,089.
• For single seniors and pensioners, the threshold will be increased from $34,244 to $34,758. The family threshold for seniors and pensioners will be increased from $47,670 to $48,385. For each dependent child or student, the family income thresholds increase by a further $3,406, instead of the previous amount of $3,356.
From 1 May 2018 certain Veteran’s payments (supplementary amounts (such as pension supplement, rent assistance and remote area allowance) of Veteran Payment paid to a veteran, and full payments (including the supplementary component) made to the spouse or partner of a veteran who dies) are tax exempt.
Division 7A
Government will defer the Board of Taxation recommendations to 1 July 2019.
It was announced that ‘Government will ensure that unpaid present entitlements come within the scope of Division 7A of the Income Tax Assessment Act 1936 from 1 July 2019’. It is not clear whether this is an admission that the ATO stance on such amounts is incorrect
SMSFs
• From 1 July 2019 a SMSF can have up to 6 members.
• From 1 July 2019 funds with 3 years of clear audit reports will only be required to be audited every three years.
Superannuation
• From 1 July 2019 the work test will not apply to someone between age 65 – 74.
• From 1 July 2018 a person earning more than $263,157 with multiple employers will be able to nominate that wages from some employers not be subject to SG, to prevent breaches of the $25,000 CC cap.
• Inactive member accounts below $6,000 will need to be transferred to the ATO from 1 July 2019.
• From 1 July 2019 a 3% cap will be put on passive fees charged by funds on accounts with balances below $6,000 and all exit fees will be banned.
• Insurance in superannuation from 1 July 2019 will no longer be able to be offered on a default basis for members with low balances of less than $6,000; members under the age of 25 years; and members whose accounts have not received a contribution in 13 months and are inactive.
Integrity measures
• From 1 July 2019 there will be a $10,000 cash payment limit so that cash payments of $10,000 or more cannot be accepted to prevent black economy transactions.
• Directors will be liable for unpaid GST, LCT and WET in addition to PAYG and SGC – no implementation date was attached to this measure.
• Phoenix offences will be introduced – no implementation date was attached to this measure.
• Directors will not always be able to resign if it will leave a company without a director – no implementation date was attached to this measure.
• From 1 July 2019 payments that have no PAYG withheld where PAYG should be withheld (either because they are employment related payments or no-ABN payments) will be denied deductibility.
• From 1 July 2019 the TPRS will cover security providers and investigation services, road freight transport and computer system design and related services.
2018 Federal Budget Update for Businesses William Buck
