2017 BUDGET REPORT SUMMARY

2017 BUDGET REPORT SUMMARY

Treasurer Scott Morrison handed down the 2017-18 Federal Budget on 9 May 2017. Below we list the key changes:

PERSONAL TAXATION

Personal tax rates

• The Budget contained no changes to the personal income tax rates and thresholds. • The 2% budget deficit levy on incomes over $180,000 will cease at the end of the 2016-17 financial year

Medicare Levy

• The Medicare levy will be increased from 2% to 2.5% of taxable income from 1 July 2019.

BUSINESS TAXATION

Corporate tax rate

• In the 2016-17 financial year, the corporate tax rate of 27.5% will apply for businesses with an aggregated turnover of less than $10m; $25m turnover in 2017-18 ; and $50m turnover from 2018-19.

Small business

• The small business entity aggregated turnover threshold will increase to $10m from 1 July 2016 - but the threshold for accessing the CGT small business concessions will remain at $2m

• The unincorporated small business tax discount will increase from 5% to 16% over a 10 year period

• The $20,000 instant asset write-off for small business entities will be extended by 12 months to 30 June 2018

• Access to the small business CGT concessions will be tightened from1 July 2017 to deny eligibility for assets which are unrelated to the small business

GST

• Purchasers of newly constructed residential properties ( or new subdivisions) will be required to remit the GST directly to the Tax Office as part of settlement from 1 July 2018.

PROPERTY

• From 1 July 2017, the Government will limit “plant and equipment” depreciation deductions to outlays actually incurred by investors in residential real estate properties

• Deductions for travel expenses related to inspecting, maintaining, or collecting rent for a residential property will be disallowed from 1 July 2017.

• The foreign resident CGT regime will be extended by:

- Denying foreign and temporary tax residents access to the CGT main residence exemption from 9 May 2017

- Increasing the CGT withholding rate for foreign tax residents from 10% to 12.5% and reducing the CGT withholding threshold for foreign tax residents from $2m to $750,000

SUPERANNUATION

The Government did not announce any new major superannuation measures in the Budget. These measures were announced:

• The use of limited recourse borrowing arrangements will be included in a member’s total super balance and the $1.6m pension transfer balance cap from 1 July 2017

• A person aged 65 or over can make a non-concessional contribution of up to $300,000 from the proceeds of selling their home from 1 July 2018

We hope you enjoyed this budget summary. Please contact us if you have any questions.

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