Proposed Government Changes to Taxation
- From 1 July 2018 the income threshold of the 32.5% tax bracket will change from $87,000 to $90,000.
- From 1 July 2022 the 19% tax bracket will change from $37,000 to $41,000 and 32.5% from $90,000 to $120,000.
- From 1 July 2024 removing of the 37% tax bracket completely and increase the 32.5% tax bracket from $120,000 to $200,000.
* The above rates do not include the Medicare levy of 2%
From 1 July 2018
- The Government will introduce the Low and Middle Income Tax Offset (LMITO) which is up to $530 per annum for Australian residents on incomes up to $125,333.
- The small business instant asset write off of $20,000 will be extended by a further 12 months to 30 June 2019 for businesses with aggregate annual turnover < $10 million.
- High income earners of over $263,157 per annum from multiple employers can nominate that their wages from certain employers are not subject to superannuation guarantee to avoid breaching the $25,000 concessional contributions cap.
From 1 July 2019
- The Medicare Levy will not increase from 2% to 2.5% as previously legislated.
- Individuals with superannuation balances below $300,000 can make contributions in the financial year following when they last met the work test.
- The maximum number of members in a SMSF will be increased from 4 to 6 individuals and those with good record keeping will be require an audit every 3 years rather than annually as current.
- Expenses for holding vacant land will cease to be deductible until the land is used for business activities, construction is complete or is approved for occupancy or rent.
- Adult tax rates available for minors receiving income from Testamentary Trusts will be limited to income derived from assets transferred (or proceeds) from a deceased estate only.
- Exit fees will be banned on all superannuation accounts.
- The pension loan scheme will be extended to all clients of pension age and increasing the maximum payment from 100% to 150% of the age pension.
Opposition Mooted Tax Policy Changes
With an election due before May 2019, the two major parties are shaping up to take starkly different tax packages to the electorate. A few of the mooted changes include possible cessation of imputation or franking credit refunds (which will impact self funded individuals), wind back on negative gearing, reduction in the capital gains tax discount and an increase in the top tax rate back to 49%. As this debate unfolds we continuously challenge our philosophies and conduct research so we are in a position to discuss your necessary strategy settings during our progress updates and other times as the needs arise. If you have any questions please call us.