News

What the 2018 Federal Budget means for you

Posted on May 9th, 2018 by WLF

Treasurer Morrison brought down his third budget last night. The measures propose to bring the budget to surplus by 2019-20, a year earlier than predicted last year.

We are pleased to present you with some highlights that will impact you, our valued clients. 

 

 

 

 

Individuals 

  • A seven-year Personal Income Tax Plan will be implemented in three steps, to introduce a low and middle income tax offset, to provide relief from bracket creep and to remove the 37% personal income tax bracket.  
  • The 2017/18 Federal Budget measure to increase the Medicare levy from 2% to 2.5% of taxable income from 1 July 2019 will not proceed.  
  • The ATO will be provided with $130.8m from 1 July 2018 to increase compliance activities targeting individual taxpayers and their tax agents.  

 

Income Tax 

  • Significant changes to the calculation of the R&D tax incentive will commence for income years beginning on or after 1 July 2018. Additionally, a maximum cash refund will also apply for some entities.  
  • The $20,000 instant asset write-off will be extended for small businesses by another year to 30 June 2019. 
  • Amendments to Div 7A will strengthen the unpaid present entitlements (UPE) rules from 1 July 2019. 
  • The start date of targeted amendments to Div 7A, announced in the 2017 budget, will be deferred from 1 July 2018 to 1 July 2019.  
  • Payments to employees and contractors are no longer deductible where any amounts that are required to be withheld are not paid, from 1 July 2019.  

 

Superannuation 

  • The annual audit requirement for self-managed superannuation funds will be changed to a three-yearly requirement for funds with a history of good record keeping and compliance.  
  • Individuals whose income exceeds $263,157, and have multiple employers, will be able to nominate that their wages from certain employers are not subject to the superannuation guarantee (SG) from 1 July 2018.  
  • An exemption from the work test for voluntary contributions to superannuation will be introduced from 1 July 2019 for people aged 65-74 with superannuation balances below $300,000, in the first year that they do not meet the work test requirements.  
  • A 3% annual cap will be introduced on passive fees charged by superannuation funds on accounts with balances below $6,000, and exit fees on all superannuation accounts will be banned.  

 

Other changes 

  • The taxable payments reporting system for payments to contractors will be expanded to include security services, road freight transport and computer system design industries, effective from 1 July 2019.  
  • Alcohol excise refund scheme cap increased from $30,000 to $100,000 per financial year from 1 July 2019, and lower excise rates will apply for smaller beer kegs.  

 

For a detailed Tax and Accounting Overview on the 2018 budget click here.

We will be discussing these changes with many of our clients as part of year-end tax planning. If you would like further information or to book an appointment to discuss the impact on your personal situation please contact us. 

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What the 2018 Federal Budget means for you

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