Budget 2016: What you need to know
If you missed Scott Morrison’s speech on ‘jobs and growth’, here are the key points:
- Small incorporated businesses will receive a further tax cut to their company tax rate. It will decrease from 28.5% to 27.5% from 1 July 2016.
- Tax cuts to be progressively extended to all companies and the tax rate eventually reduced to 25% for all companies by the 2026-2027 income year.
- ‘Small Business’ threshold will change from a turnover of $2 million to $10 million from 1 July 2016. The $2 million threshold will remain in place for access to the small business capital gains tax concessions.
- Increases to the unincorporated tax discount for small businesses from 5% to 8% but still capped at $1,000 per person.
- The threshold for the 32.5% marginal tax rate bracket for personal income tax will increase from $80,000 to $87,000.
- $1.6 million cap on the total amount of superannuation that can be transferred into pension accounts from 1 July 2017. Any amounts greater than $1.6 million must remain in an accumulation account and will be taxed at the 15% concessional rate.
- Members already in the retirement phase with pension account balances above $1.6 million will be required to reduce their balance to $1.6 million by 1 July 2017.
- There will be a 30% tax on concessional contributions for people with incomes greater than $250,000 from 1 July 2017.
- Concessional contributions will be capped at $25,000 per annum for all taxpayers.
- ‘Catch-up’ contributions will allow individuals who have not reached their concessional contribution caps in the previous five years to make additional concessional contributions from 1 July 2017. This only applies to people with super balances less than $500,000.
- Introduction of lifetime cap of $500,000 on non-concessional contributions into superannuation.
- Introduction of a Low Income Superannuation Tax Offset which will replace the current Low Income Superannuation Contribution when it ends on 30 June 2017.
- People under 75 years of age can claim a tax deduction for personal superannuation contributions irrespective of their employment arrangements from 1 July 2017. People under 75 years of age will no longer have to satisfy a work test.
- Partners of low income spouses can make contributions to their partner’s superannuation and claim a tax offset of up to $500 for the contributions from 1 July 2017. The income threshold for the low income spouse will be increased from $10,800 to $37,000.
- Youth Employment Package which provides pre-employment skills training and internship placements.
- Employers who hire a young job seeker in an ongoing job will receive a wage subsidy of up to $10,000 paid over six months
- GST will be extended to low value goods imported by consumers from 1 July 2017.
- ATO crackdown on anti-avoidance measures by multinational corporations.
- Tobacco excise will increase by 12.5% each year from 2017 to 2020.
- Wine Equalisation Tax rebate cap will decrease from $500,000 to $350,000 on 1 July 2017 with a further reduction to $290,000 on 1 July 2018.
The notable changes are to tax rates and superannuation but we will wait and see until after the election to see what actually gets implemented.
If you have any questions about the 2016 Budget, do not hesitate to contact Andrea Michaels at firstname.lastname@example.org or on (08) 7111 2995.