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.
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
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
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.