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

Superannuation

• 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.

SMEs

• 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