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2018 Federal Budget Highlights

Updated: Jun 27, 2018

Confused by the federal budget? Let us shine some light on the key proposals with tax implications in less than 500 words.

Individuals:

  • A new Personal Income Tax Plan to be introduced over 6 years. Aimed at relief for low and medium income Australians it includes a new offset, temporarily increase the threshold of the 32.5% tax bracket and eventually remove the 37% tax bracket entirely.

  • A increase to medicare levy low-income thresholds from the 2018 financial year.

  • Removal of tax deductions for expenses associated with holding vacant land not genuinely being used to earn assessable income.


Business:

  • Immediate write-off for assets less than $20,000 extended.

  • Introduction of economy wide cash payment limit of $10,000.

  • From 1 July 2019, businesses will no longer be able to claim a deduction for payments to their employees such as wages where they have not withheld any amount of PAYG from these payments (i.e., despite the fact the PAYG withholding requirements apply). Payments made by businesses to contractors where the contractor does not provide an ABN and the business does not withhold any amount of PAYG (despite the withholding requirements applying) will also not be deductible from this date.


Superannuation:

  • Individuals will be required to confirm in their income tax returns that they have complied with “notice of intent” requirements if they intend to claim a tax deduction for personal super contributions.

  • The Government will allow individuals whose income exceeds $263,157, and who have multiple employers, to nominate that their wages from certain employers are not subject to the superannuation guarantee (SG), in order to avoid unintentionally breaching the $25,000 annual concessional contributions cap as a result of multiple compulsory SG contributions.

  • The number of allowable members in SMSFs will be increased from four to six.

  • The annual audit requirement for SMSFs will be changed to three-yearly requirement for funds with a history of good record keeping and compliance.

  • Insurance in superannuation will move from being default to being offered on an opt-in basis for members with balances less than $6000; members under 25 years of age and members whose accounts have not received a contribution in 13 months and are inactive.


Company:

  • Division 7A of ITAA 1936 will be amended to clarify the circumstances in which it applies to unpaid present entitlements (UPEs) — where a related private company becomes entitled to a share of trust income as a beneficiary but has not been paid that amount. In addition, the start date of targeted amendments to Div 7A announced in the 2017 Budget will be deferred from 1 July 2018 to 1 July 2019.

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