“Jobs and Growth” is the catch-phrase of the New Treasurer, Scott Morrison’s Federal Budget speech for 2016-17 announced on 3 May 2016. The team at MKS Group have been busy putting together the important facts on how the announcements will affect our clients below.
But now to our overview of the 2016 Federal Budget speech –
- From 1 July 2016 personal tax rates will change, increasing the 32.5% rate threshold from $80,000 to $87,000.
- The 2% Temporary Budget Repair Levy will expire at the end of the 2017 income year, therefore reducing the highest marginal tax rate to 45%.
- No increase for indexation to the income thresholds for the Medicare Levy Surcharge and Private Health Insurance Rebate to 1 July 2021.
- Staged reduction of the company tax rate over 10 years to 25%.
- From 1 July 2016, small business company tax rate reduced to 27.5%.
- Greater access to small business tax concessions by lifting the annual turnover threshold from $2 million to $10 million from 1 July 2016.
- Simplification of the application of Division 7A.
- A number of small business tax concessions will extend to more businesses with the increase of the annual turnover threshold from $2 million to $10 million
- Turnover threshold for access to the unincorporated small business threshold for individuals increased to $2 million to $5 million
- $1.6 million cap on super transfers to retirement balances, meaning that members in pension phase with balances greater than $1.6 million will now have a separate accumulation account for the excess balance and pay tax on superannuation earnings at 15% effective from 1 July 2017.
- $500,000 lifetime non-concessional contributions cap (after tax) from 7.30pm on 3 May 2016 (e.g. effective immediately).
- Concessional contributions tax increase and reduction in concessional contributions cap from 1 July 2017 for taxpayers with incomes of $250,000 or more.
- Proposal to remove the exemption on profits/earnings in pension accounts where members have commenced a transition to retirement pension from 1 July 2017.
- All taxpayers will be able to claim a tax deduction for personal superannuation contributions irrespective of their employment circumstances from 1 July 2017 up to $25,000 contribution cap.
- Removal of “work test” for superannuation contributions.
- Low income Superannuation Tax Offset up to $500.
- International Tax
- Anti-avoidance measures announced to tackle multinationals operating in Australia.
- Introduction of a Diverted Profits Tax from 1 July 2017 imposing a penalty of 40% on profits that are diverted offshore through related party transactions.
- From 1 July 2017 GST will be extended to low value goods imported by consumers and overseas suppliers will collect and remit GST for these goods.
For further explanation on any of the budget announcements, call the MKS Group team on 03 9374 8400 or email us at firstname.lastname@example.org .