The Federal Treasurer, Scott Morrison handed down the budget for the 2017-18 year on May 9 2017.  There are a number of items that we have highlighted as being relevant for our 13 Concepts clients, with impacts for businesses and investors.

Businesses

The budget included a number of items that are relevant to small and medium businesses:

  • Reconfirmed commitment to reduce the corporate tax rate to 25% by 2026-27.  The current rate for businesses turning over less than $10 million is 27.5%
  • Extension of the instant asset write-off (Accelerated Depreciation) for assets costing less than $20,000 to June 2018 (excludes in-house software)
  • Adjustment to CGT Small Business concessions to restrict to assets used in the business from 1 July 2017
  • Single Touch Payroll (STP) reporting to be introduced from July 2017, with payroll and superannuation amounts reported through Xero / MYOB
  • Increased access to tax losses with a more flexible ‘predominantly similar business test’
  • Crowd-Sourced Equity Funding extended to proprietary companies
  • Levy introduced from March 2018 for skilled visa staff

Personal Taxes

There are a number of changes announced that will impact upon individual tax returns:

  • Medicare Levy increase to 2.5% from 1 July 2019 (0.5% increase)
  • The Budget Deficit Levy of 2% for taxable incomes above $180,000 will end on 30 June 2017 as originally planned
  • HECS repayment thresholds dropped to $42,000 from 1 July 2018
  • Taxapayers aged over 65 who downsize their home can contribute up to $300,000 into their superannuation from 1 July 2018

Property Investors

With a current spotlight on housing affordability, the 2017-18 Budget included some key changes for property investors:

  • Depreciation deductions for Plant & Equipment on real estate properties to be limited to amounts actually paid by investors from 9 May 2017.  Existing investments will be grandfathered, however investors who purchase a property from 9 May 2017 and are a subsequent owner will not be able to claim depreciation for plant & equipment purchased by the previous owners.
  • Travel expenses relating to residential rental properties will be disallowed from 1 July 2017.
  • Purchasers of new constructed Residential Properties (or new subdivisions) to pay the GST to the tax office on settlement from 1 Jul 2018
  • Foreign and Temporary Residents will not be able to access the CGT main residence exemption from 9 May 2017 (existing holdings grandfathered until 30 June 2019)
  • Foreign ownership in new developments limited to 50%

 

If you have any questions on any of the budget changes please contact the 13 Concepts office on 1300 659 103.

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