The recent federal budget once again provided some insights into the governments broader fiscal plans for the economy, however, given the current political environment, a looming federal election and the fact that most budget initiatives will not commence until June 2019, there is a real possibility that the budget initiatives will not be passed and rather be altered by a changing government.
They changes for the 2019 financial year include:
From a personal taxation perspective there are only minor changes that will affect the 2019 financial year.
Personal tax bracket changes
- The top threshold of the 32.5% personal income tax bracket will increase from $87,000 to $90,000.
Introduction of the Low & Middle Income tax offset
- Individuals who have a taxable income of up to $125,333 will be provided with a tax offset.
Property Investment and Development – GST and subdivisions
- Effective 1 July 2018, any GST on the purchase of a new residential property will be remitted directly to the ATO by the buyer (purchaser) on settlement and as part of the settlement process.
- Expenses incurred when buying vacant land, unless the land is immediately available for rent, will no longer be deductible against Income. Such expenses will now only be claimable as a Capital Expense.
- Individuals with income exceeding $263,157 (upper SG contribution limit – $25,000) who have multiple employers will be able to nominate to exclude their wages from SG. From 1 July 2018 there will be a form available for employees to complete for an exemption to give to their nominated employers.
- If you are over 65 and have held your home for 10 years or more and are looking to sell, you might be able to contribute some of the proceeds of the sale of your home to superannuation.
- Don’t forget super contributions are no longer governed by the ‘work test’ so anyone can contribute to their personal super up to the annual limit of $25,000 and be entitled to a tax deduction.
COMPANIES AND OTHER TRADING ENTITIES
One-off Superannuation Guarantee Amnesty
The amnesty applies to employers that have not fully paid the Superannuation Guarantee from 1 July 1992. Yes that’s right since 1992. However, to qualify for this amnesty, employers must own up and complete the ATO’s SG Amnesty Form. Once completed, payments can be made in full or over a period of time by entering into a payment plan with the ATO (If the payment plan is defaulted, the amnesty will no longer apply).
Please note that the amnesty will only apply to those who voluntarily disclose the unpaid amounts. The super guarantee charge (interest on shortfall amounts) will still apply under the amnesty however no penalties will apply.
Small Business –turnover of $10 Million or less.
- Lower tax rates – 27.5% rather than 30% for larger entities.
- An immediate tax deduction (write off’s) for individual assets costing less than $20,000 (GST exclusive) effective to 30 June 2019.
- GST will apply to sales of goods to Australian consumers with a value of under $1,000.
Taxable Payments Reporting
- Formerly this applied only to the Building and Construction Industry. It has now been extended to include Cleaners, Couriers, Security, Road Freight and Construction Design. Importantly, this change is not immediate: it will be implemented over 2 years.
Single Touch Payroll (STP)
- STP from 1 July 2018 for all employers with 20 + employees and 1 July 2019 for everyone else.
- Under STP, wages and super payments will need to be reported to the ATO each pay run.
Research and Development – R&D
- The way the R&D tax incentive is managed will change. Caps now introduced on cash rebates and for large companies, a refocus of high intensity R&D activities.
- The effective freezing of capital balances for testamentary trust tax concessions
Foreigner Land Tax
- A surcharge applies for foreign persons who own residential land in NSW.
- Family Trusts that own land will now be levied with this surcharge unless the trust deed specifically excludes foreign persons from being beneficiaries of the trust.