There was a lot of information in last night's budget. Here are our top ten changes most likely to affect you – our private individual and business clients.
The changes to super are quite substantial so please contact us before you make any further contributions to your super fund. We will be in contact with you directly over the next few weeks if any of these measures have a substantial impact on your tax affairs.
- Reduction in company tax rate to 27.5% for small business companies with a turnover of less than $10M. To apply from 1 July 2016.
- Individuals, Trusts and Partnership small businesses will get some additional income tax relief if your turnover is less than $5 million.
- The increase in the small business entity threshold from $2M to $10M from 1 July 2016 will give many more businesses access to the small business concessions – such as the $20,000 asset write off and simplified depreciation and trading stock rules. They will not be extending this to the CGT concessions.
- Deductible (concessional) superannuation contribution rules will be relaxed and will now allow certain individuals to make catch up contributions, however they will be reduced to $25,000 per person per year from 1 July 2017.
- Non-deductible (non-concessional) superannuation contributions will be restricted to a lifetime cap of $500,000. This new rule commenced last night at 7.30pm and they will count contributions made since 2007. Contributions made before last night cannot result in an excess, but if you have already put in $500,000 you cannot put in any more non-concessional contributions.
- Retirees in retirement phase will be limited to having only $1.6M of funds in the tax free portion of their super fund. Retirees with more than this will now need to move it out of the tax free portion by 1 July 2017. Furthermore, portions of funds allocated to Transition to Retirement Streams will no longer be tax free from 1 July 2017.
- Deductible (concessional) superannuation contributions will be taxed at 30% rather than 15% for those on incomes between $250,000 and $300,000. (Those above $300,000 are already taxed at 30%. From 1 July 2017)
- No change to negative gearing of investment properties.
- Increase in level at which 32.5 % tax rate starts from $80,000 to $87,000 and no announcement to extend the budget repair levy after 30 June 2017.
- Reductions to tax rates on super and an increase to the thresholds for when the Medicare Levy will apply to low income earners.
Please call our office if you wish to discuss these changes in further detail.
Nicole and The Macro Group Team