The Federal Government released the 2018 Federal Budget on 8 May 2018. Scott Morrison’s focus is that the Budget will accomplish “A Stronger Economy. More Jobs. Guaranteeing Essential Services”. The Federal Government is gearing up for re-election.
The Budget measures are wide-reaching and will impact a number of individuals and businesses, together with targeting the black (cash) economy and other areas. Certain industries will receive additional funding.
Please read on for key highlights from the Budget. These are proposed measures and will be implemented once the legislation has received Royal Assent. We will keep you updated on the final legislation that is passed.
Personal Tax
• A three-stage, seven-year personal income tax plan will be implemented. The tax rates will be as follows:
| Tax Rate | 2017/2018 | 2018/2019 to 2021/2022 | 2022/2023 to 2023/2024 | 2024 onwards |
| 0% | Up to $18,200 | Up to $18,200 | Up to $18,200 | Up to $18,200 |
| 19% | $18,201 – $37,000 | $18,201 – $37,000 | $18,201 – $41,000 | $18,201 – $41,000 |
| 32.5% | $37,001 – $87,000 | $37,001 – $90,000 | $41,001 – $120,000 | $41,001 – $200,000 |
| 37% | $87,001 – $180,000 | $90,001 – $180,000 | $120,001 – $180,00 | N/A |
| 45% | > $180,001 | > $180,001 | > $180,001 | > $200,000 |
• Low-income tax offset increase from $445 to $645 from 1 July 2022.
• New Low and Middle Income Tax Offset of up to $530 will be available for the years ending 30 June 2019 to 30 June 2022 which can only be accessed by lodging your income tax return.
• No increase to the Medicare Levy from 1 July 2019 from 2% to 2.5% (proposed in last year’s budget).
• Increase in the Medicare levy low-income threshold from the 2017/2018 tax year.
• Government assistance payments (such as pension supplement, rent assistance, remote area allowance) that are paid to a veteran or partner of a deceased veteran are exempt from income tax from 1 May 2018.
• If you are a sportsperson or entertainer, from 1 July 2019, you will be unable to license your fame or image to another entity (such as a related company or trust) and derive income from your fame/image in that entity. The income and associated income tax will be payable in your personal tax return.
• Concessional tax rates for minors receiving income from testamentary trusts from 1 July 2019 will be limited to income derived from assets that are transferred from the deceased estate or proceeds of the disposal or investment of those assets.
Businesses
• Small business instant asset write-off is extended to 30 June 2019. Eligible business assets that cost $20,000 or less can be claimed as an immediate deduction if purchased and installed for use by 30 June 2019.
• Research and Development tax incentive will change from 1 July 2018 to tie in with the level of R&D expenditure and the claimant’s company tax rate. A maximum cash refund will apply to some entities.
• From 1 July 2019, businesses cannot claim deductions for payments to employees or contractors where the PAYG withholding tax or no ABN withholding tax has not been withheld.
• From 1 July 2019, deductions cannot be claimed for expenses related to holding vacant land. Deductions can only be claimed after a property is constructed on the land and it is available for rent or if the land is used in primary production business.
• Partners assigning the rights to future partnership income will no longer be able to access the small business CGT concessions from 8 May 2018.
• Directors will be personally liable for a company’s unpaid GST to the ATO.
Superannuation
• Maximum number of members in an SMSF or small APRA fund will increase from 4 to 6 from 1 July 2019.
• Annual audit requirement for an SMSF will be changed to a 3 yearly requirement from 1 July 2019 if it has a history of good record-keeping and compliance.
• 3% annual cap on passive fees charged by superannuation funds with balances below $6,000 from 1 July 2019.
• Ban on exit fees on all superannuation funds from 1 July 2019.
• Individuals aged 65-74 years with superannuation balances below $300,000 will be exempt from the work test in the first year that they do not satisfy the work test requirements (from 1 July 2019).
• Individuals with income above $263,157 across multiple employers will be able to nominate wages from certain employers that are not subject to superannuation guarantee from 1 July 2018.
Black Economy Package
• Cash payments made to businesses will be limited to $10,000 from 1 July 2019.
• The Taxable Payments Reporting System (TPRS) which requires the annual lodgement of a report to the ATO for payments to contractors in the construction, cleaning and courier industries will be extended from 1 July 2019. TPRS will also be mandatory for security providers and investigation services; road freight transport and computer system design and related services.
• Increased funding to the ATO to target the black (cash) economy.
Other Taxes
• Offshore sellers of hotel accommodation will be required to charge GST from 1 July 2019.
• Alcohol excise refund scheme cap increased from $30,000 to $100,000 per financial year from 1 July 2019 and lower excise rates will apply for smaller beer kegs.
© Measures to combat illicit tobacco in Australia, including collecting tobacco duties and taxes on importation.
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Please note that this information is not specific and is general in nature and cannot be relied on as advice, please contact us for specific advice for you and your circumstances.