RSM Australia

2016-17 Budget Comparison

A LOOK AT the BUDGET 2016-17

Which measures were enacted?

A number of announcements from the budget 2016-17 have been either introduced or enacted bills. A summary of the key taxation measures and their status are listed below.

Measure

Summary

Start Date

Status

Increased turnover threshold for small business income tax concessions

The small business entity turnover threshold will be increased from $2m to $10m from 1 July 2016. Businesses with an annual aggregated turnover of less than $10m will be able to access existing small business income tax concessions

 

1 July 2016

Introduced

Unincorporated small business tax discount rate increased and eligibility expanded

 

The small business tax offset will be increased in phases over 10 years from the current 5% to 16% with a first increase to 8% on 1 July 2016. The $1,000 cap remains unchanged.

1 July 2016

Introduced

Company tax rate cuts

The company tax rate will be progressively reduced to 25% for entities for businesses with an annual aggregated turnover of less than $50m from 2016/17

1 July 2016

Introduced

Early-stage innovative company

incentives expanded

Amendments will be made to the tax

incentives for investments in early

stage innovative companies including:

  • Reducing the investment holding period for the CGT exemption from three years to 12 months
  • Imposing a time limit on incorporation and criteria for determining if a company is an innovation company under the definition of eligible business
  • Requiring that the investor and innovation company are non-affiliates, and
  • Limiting the investment amount for non-sophisticated investors to qualify for the tax offset to $50,000 or less per income year.

 

Note: the above amendments expand the concessions available from the 2016/17 income year for investments in early stage innovative companies that were announced in 2015, which included:

  • A 20% non-refundable tax offset capped at $200,000 per investor per year, and
  • A 10-year CGT exemption where investments are held for three years

 

1 July 2016

Enacted

Personal income tax relief

The 37% marginal tax rate taxable income threshold will increase from $80,000 to $87,000.

 

1 July 2016

Enacted

Medicare levy surcharge and private health insurance rebate thresholds paused

The pause in the indexation of the income thresholds for the Medicare levy surcharge and the private health insurance rebate will continue for a further three years (from 2018/19 to 2020/21).

1 July 2018

Enacted

Division 293 tax income threshold

The Division 293 threshold will be lowered from $300,000 to $250,000.

1 July 2017

Enacted

Concessional contributions changes

The annual cap on concessional superannuation contributions will be reduced to $25,000 (currently $30,000 under age 50 and $35,000 for ages 50 and over).

1 July 2017

Enacted

Transition to retirement income streams

The tax exemption on earnings of assets supporting Transition to Retirement Income Streams will be removed

1 July 2017

Enacted

Lifetime non-concessional cap

A lifetime non-concessional contributions cap of $500,000 was proposed but will not proceed.

 

Instead, from 1 July 2017, the cap is reduced to $100,000 for members between 65 and 75 years of age. Members under 65 years of age will have the option of contribution up to $300,000 over a three-year period, depending on their total superannuation balance.

 

The new measures from 1 July 2017 replace previous annual caps that allow annual non-concessional contributions of up to $180,000 per year (or $540,000 every three years for individuals aged under 65).

 

3 May 2016

7:30pm (AEST)

Announced - Will not proceed

Tax deduction for personal superannuation contributions

All individuals up to age 75 (other than members of certain prescribed funds) will be allowed to claim an income tax deduction for personal superannuation contributions. This allows all individuals, regardless of their employment circumstances, to make concessional contributions up to the concessional cap.

1 July 2017

Enacted

Retirement transfer balance cap introduced

A balance cap of $1.6m on the total amount of accumulated superannuation an individual can transfer into the tax-free retirement phase will be introduced. Subsequent earnings on these balances will not be restricted.

 

1 July 2017

Enacted

GST on low value imports

GST will be extended to low value goods imported by customers from 1 July 2017.

1 July 2017

Introduced


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