2018 Federal Budget Review
Posted on 8th May, 2018
The Federal Treasurer, Mr Scott Morrison, handed down the governments Federal Budget on the 8th of May 2018.
As tends to happen in a Federal Budget leading up to a Federal Election the purse strings have been loosened with every Australian taxpayer to enjoy a tax cut this coming financial year and every year thereafter for seven years. As always there are winners and losers and we have provided a summary below of the key changes to individuals, business owners and superannuants.
From a small business perspective, the most significant thing to come out of this budget is the extension of the instant asset immediate write-off cap of $20,000 being extended for another 12 months to 30 June 2019. This is a big win for businesses trying to grow and, subsequently helps stimulate the economy and ultimately create more jobs.
From a superannuation perspective trustees of SMSF’s with good compliance history look to be rewarded with the burden of having your SMSF audit annually extended to every three years.
Budget at a Glance
Individuals and Families
- A low and middle income tax offset will be introduced as a non-refundable tax offset of up to $530 per annum to resident low and middle income taxpayers from 2018-2019 to 2021-2022
- Middle income taxpayers will be provided relief for from bracket creep in phases
- From 1 July 2018, the top threshold of the 32.5% bracket will be increased from $87,000 to $90,000.
- From 1 July 2022, the top threshold of the 32.5% bracket will be further increased from $90,000 to $120,000.
- The 37% bracket will be removed from 1 July 2024
- From 1 July 2024, the top threshold of the 32.5% bracket will be increased from $120,000 to $200,000. Taxpayers will pay the top marginal tax rate of 45% of taxable incomes exceeding $200,000 and the 32.5% bracket will apply to taxable incomes of $41,001 to $200,000
- The maximum number of allowable members in SMSF’s and small APRA funds will be increased from 4 to 6 from 1 July 2019
- 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.
- Individuals will be required to confirm in their income tax returns that they have complied with “notice of intent” requirements in relation to their personal superannuation contributions, effective 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.
- Insurance arrangements for certain superannuation members will be changed from being a default framework to being offered on an opt-in basis.
- A 3 per cent annual cap will be introduced on passive fees charged by superannuation funds on accounts with balances below $6000, and exit fees on all superannuation accounts will be banned.
- The financial institutions supervisory levies will be increased to raise additional revenue of $31.9 million over four years, from 2018-19.
- The $20,000 instant asset write-off for small business will be extended by 12 months to 30 June 2019, for businesses with an aggregated annual turnover of less than $10 million.
- 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.
- Significant changes to the calculation of the R&D tax incentive will begin from 1 July 2018
- Amendments to Division 7A loan arrangements will strengthen the unpaid present entitlement (UPE) rules from 1 July 2019