Budget 2018 Announcements
|Tax rates and thresholds Rate||2018-19 to 2021-22||2022-23 and 2023-24||2024-25 onwards|
|0%||$0 – $18,200||$0 – $18,200||$0 – $18,200|
|19%||$18,201 – 37,000||$18,201 – 41,000||$18,201 – $41,000|
|32.5%||$37,001 – 90,000||$41,001 – 120,000||$41,001 – $200,000|
|37%||$90,001 – $180,000||$120,001 – $180,000||N/A|
We see our long term plan by the government is to make our progression taxation brackets more flat tax based.
Minors and testamentary trusts: Concessional tax rates limit
The concessional tax rates available for minors receiving income from testamentary trusts will be limited to income derived from assets that are transferred from deceased estates or the proceeds of the disposal or investment of those assets. Currently, income received by minors from testamentary trusts is taxed at normal adult rates rather than the higher tax rates that generally apply to minors.
The Government is concerned that some taxpayers are able to inappropriately obtain the benefit of this lower tax rate by injecting assets unrelated to the deceased estate into testamentary trusts. This measure will clarify that minors will be taxed at adult marginal tax rates only in relation to income of a testamentary trust that is generated from assets of a deceased estate (or the proceed of the disposal or investment of these assets).
Date of effect
This measure applies from 1 July 2019.
Increased compliance activities: individuals and their tax agents
Taxation of income for high profile individuals
The Government will ensure that high profile individuals will no longer be able to take advantage of lower tax rates by licensing their fame or image to another entity.
Increase in Medicare levy low-income thresholds for 2017-18
A standard tax deduction for work expenses? Not in this Budget
$20,000 instant asset write-off for SBEs extended by 12 months
R&D tax incentive overhaul
Taxing digital business in Australia – discussion paper to be issued within weeks
Deductions disallowed for holding vacant land
The Government will disallow deductions for expenses associated with holding vacant land. Where the land is not genuinely held for the purpose of earning assessable income, expenses such as interest costs will be denied. It is hoped this measure will reduce the tax incentives for land banking which limit the use of land for housing or other development.
Black Economy Taskforce: consultation on new regulatory framework for ABNs
The Government will consult on and design a new regulatory framework for Australian Business Numbers (ABNs) in the 2018-19 income year. This measure implements a recommendation of the final report of the Black Economy Taskforce that the ABN system be strengthened to provide improved confidence in the identity and legitimacy of Australian businesses.
No tax deduction for non-compliant PAYG and contractor payments
Measures will be enacted to ensure that taxpayers will not be able to claim deductions for payments to their employees such as wages where they have not withheld any amount of PAYG from these payments, despite the PAYG withholding requirements applying.
Similarly, the Government intends to remove deductions for payments made by businesses to contractors where the contractor does not provide an ABN and the business does not withhold any amount of PAYG (again despite the withholding requirements applying).
This was recommended by the Black Economy Taskforce.
The revenue expectations linked with this expenditure is quite modest, ie “a small unquantifiable gain to revenue over the forward estimates period”.
Date of effect
The measure will commence on 1 July 2019 (ie next year).
Black Economy: increase in ATO funding
Cash payments limit: payments made to businesses
The Government will introduce a limit of $10,000 for cash payments made to businesses for goods and services.
This measure will require transactions over a threshold to be made through an electronic payment system or by cheque. Logically it would seem that this threshold amount should be $10,000, but this is not spelt out in the Budget papers or the media release.
The rules will not apply to transactions with:
? financial institutions; or
? consumer-to-consumer non-business transactions.
Reportable payments system extended: security providers, road freight transport and computer design
No major GST measures in 2018-19 Federal Budget
SMSF member limit to increase from 4 to 6 – law to be amended
The Budget confirmed that the maximum number of allowable members in new and existing self-managed superannuation funds (SMSFs) and small APRA funds will be expanded from 4 to 6 members from 1 July 2019.
Personal superannuation contributions – improving notice of intention to deduct
Superannuation work test exemption for contributions by recent retirees
Super Guarantee opt-out for high-income employees who breach concessional cap
SMSF audit cycle of 3 years for funds with good compliance history
The annual audit requirement for self-managed superannuation funds (SMSFs) will be extend to a 3-yearly cycle for funds with a history of good record-keeping and compliance.
The measure will apply to SMSF trustees that have a history of 3 consecutive years of clear audit reports and that have lodged the fund’s annual returns in a timely manner.
Date of effect
This measure will start on 1 July 2019.
Super borrowings – No Budget changes to Limited Recourse Borrowing Arrangements but restrictions growing
Super fees to be capped at 3% for small accounts, exit fees banned
Passive fees charged by superannuation funds will be capped at 3% for small accounts with balances below $6,000, while exit fees will be banned for all superannuation accounts from 1 July 2019. These measures form part of the Government’s Protecting Your Super Package.
ATO consolidation of small inactive super accounts to get more proactive
The Government will strengthen the ATO-led consolidation regime by requiring the transfer of all inactive superannuation accounts with balances below $6,000 to the ATO to protect them from further erosion.
Superannuation insurance opt-in rule for younger and low-balance members
The Government will change the insurance arrangements for certain cohorts of superannuation members from 1 July 2019. Under the proposed changes, insurance within superannuation will move from a default framework to be offered on an opt-in basis for:
? members with low balances of less than $6,000;
? members under the age of 25 years; and
? members with inactive accounts that have not received a contribution in 13 months.
Super trustees required to formulate retirement income strategy for members
Superannuation supervisory levies to increase from 1 July 2018
The Government will fully recover the cost of regulating superannuation activities by raising an additional $31.9 million over 4 years from 2018-19 by increasing the Financial Institutions Supervisory Levies. This measure is expected to fully recover the cost of superannuation activities undertaken by the Tax Office.
Date of effect
1 July 2018.
Increase in tax practitioner registration fees
The Government will provide $20.1 million over four years from the 2018-19 income year to the Tax Practitioners Board (TPB) to assist it in meeting broadened responsibilities to ensure that tax agent services are provided to the public in accordance with appropriate professional and ethical standards. This measure will be funded by an increase in tax practitioner fees.
Combatting illicit tobacco: duty to be paid when tobacco enters country; new Taskforce; more ATO resources
Excise changes to benefit smaller (including craft) brewers
Additional funding for Single Touch Payroll to assist small businesses
Royal Commission into Banking: additional funding for ASIC
Measures for older Australians
The Government will introduce a range of measures to enhance the standard of living of older Australians:
? increase the Pension Work Bonus from $250 to $300 per fortnight (ie $7,800 a year) and extend the Bonus to self-employed retirees who will be able to earn up to $300 per fortnight without impacting their pension;
? amend the pension means test rules to encourage the development and take up of lifetime retirement income products that can help retirees manage the risk of outliving their savings; and
? expand the Pension Loans Scheme to everyone over Age Pension age and the maximum fortnightly income stream will be increased to 150% of the Age Pension rate. This will enable Australians to use the equity in their homes to increase their incomes.
These measures commence on 1 July 2019.