With the Federal Budget announced yesterday, we have summarized tax related takeaways for small and medium size business and individuals.
Private business:
- – The small business threshold of $2 million annual turnover will be increased to $10 million from 1 July 2016. This will apply to accelerated depreciation and access to the lower small business corporate tax rate. The current $2 million turnover threshold is retained for access to the small business CGT concessions. Access to the unincorporated small business tax discount will be limited to entities with turnover of less than $5 million
- – Increase the tax discount for unincorporated small business incrementally over 10 years from 5 per cent to 16 per cent, first increasing to 8 per cent from 1 July 2016
- – Targeted amendments to improve Division 7A (deemed dividends) from 1 July 2018
Corporate tax:
- – Reducing the corporate tax rate for all companies to 25 per cent over 10 years, commencing with a reduction in the rate for small business companies (with turnover of up to $10 million to 27.5 per cent from 2016-17 income year
- – Tax consolidation – extend application of 2014-15 budget measure regarding securitised assets to non-financial institutions with securitisation arrangement
- – Tax consolidation – remove adjustments relating to deferred tax liabilities from entry and exit calculation, for joining and leaving events under transactions that commence after the amending legislation is introduced into Parliament
- – Tax consolidation – modify the deductible liabilities measure by deferring the start date to 1 July 2016 and to ensure that a group that acquires a subsidiary with deductible liabilities will no longer include those liabilities in the consolidation entry calculation
Individuals:
- – Increase in the threshold at which the 37 per cent marginal tax rate cuts in from $80,001 to $87,001 to address bracket creep
Superannuation: From 1 July 2017:
- – Lowering the threshold at which the additional 15 per cent tax on superannuation contributions of high income earners applies from $300,000 to $250,000
- – Lowering the concessional contributions cap to $25,000
- – Improve flexibility of superannuation by removing restrictions on person aged 65-74 from making contributions
- – Increase access to low income spouse superannuation offset
- – Introduce a $1.6 million transfer balance cap on total amount of accumulated super that an individual can transfer into retirement phase
- – Introduce a $500,000 lifetime cap on non-concessional superannuation contributions
- – Introduce a low income superannuation tax offset
- – Ability to make additional concessional contribution from 1 July 2017 to “catch up” where concessional caps in previous years have not been reached (intended to benefit people that have been in and out of the workforce)
- – Removing the anti-detriment provisions for super funds
- – Remove the tax exemption on earnings of assets supporting transition to retirement income streams
- – Allow individuals up to age 75 to claim tax deductions for personal super contributions regardless of their employment circumstances
We would be happy to discuss this with you should you have any questions. Call us at (02) 9633 4893 or leave us a message on our contact page.
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