2017 BUDGET REPORT SUMMARY

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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.

Disclaimer - The material contained in this newsletter does not constitute advice. DPL is not responsible for any action taken in reliance on any information contained in this newsletter. Anyone reading the newsletter should not act upon material contained in this newsletter without appropriate consultation


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