Last month the Federal Government handed down its 2018/19 budget on Tuesday 8th May. Following are some of the key Budget announcements affecting individual taxpayers, businesses, investors and retirees.
The introduction of the 'Low and Middle Income Tax Offset', a temporary non-refundable tax offset of up to $530 p.a. to Australian resident low and middle income taxpayers for the 2019 to 2022 income years. This offset will apply in addition to the Low Income Tax Offset.
Providing tax relief for individual taxpayers by progressively increasing some of the tax brackets (including an increase in the upper threshold of the 32.5% personal income tax bracket from $87,000 to $90,000 from 1 July 2018), and eventually removing the 37% tax bracket entirely.
Increase in the Medicare levy low-income thresholds for singles, families, and seniors and pensioners for the 2018 income year.
The $20,000 immediate write-off for small business will be extended by a further 12 months to 30 June 2019 (i.e., for businesses with aggregated annual turnover less than $10 million).
Remove tax deductibility of payments where PAYG withholding is disregarded.
Introduction of an economy-wide cash payment limit. From 1 July 2019, the Government will introduce a limit of $10,000 for cash payments made to businesses for goods and services.
Partners that alienate their income by creating, assigning or otherwise dealing in rights to the future income of a partnership (i.e., 'Everett assignments' will no longer be able to access the small business CGT concessions from 8 May 2018.
Expanding the contractor payment reporting system to: security providers and investigation services, road freight transport and computer system design and related services.
Under the contractor payment reporting system, businesses are required to report payments to contractors to the ATO. The Government has announced it will further expand the contractor payment reporting system.
Increasing the maximum number of allowable members in an SMSF (or small APRA fund) from four to six members from 1 July 2019 (along with various other superannuation-related proposals).
Introduction of an exemption from the work test for voluntary contributions to superannuation, for people aged 65-74 with superannuation balances below $300,000, in the first year that they do not meet the work test requirements.
From 1 July 2019, the Government will change the annual audit requirement to a three-yearly requirement for SMSFs with a history of good record-keeping and compliance.
The Government intends to improve the integrity of the ‘notice of intent’ (‘NOI’) processes for claiming personal superannuation contribution tax deductions.
Denying deductions for expenses associated with holding vacant residential or commercial land from 1 July 2019.
Ensuring that unpaid present entitlements (‘UPEs’) come within the scope of Div.7A from 1 July 2019.
Reforms to combat illegal phoenixing including the extension of the Director Penalty Regime to GST, luxury car tax and wine equalisation tax, making directors personally liable for the company’s debts.
Improving the taxation of testamentary trusts and extending anti-avoidance rules for circular trust distributions.