Full Summary of the Australian 2018 Federal Budget
The Australian Government sets out the economic and fiscal outlook for Australia with the Federal Budget each year. This includes revenue and expenditure estimates for the current financial year, along with projections for future years. The Federal Budget implements the Australian Government’s social and political goals, and how they plan on achieving it. The following is the overview of the changes the Australian Government wants to implement and how it may impact you business, super and tax wise:
The Federal Budget has put forward these proposed measures:
SUPER AND PENSIONS
• Self-managed super funds (SMSFs) can now have up to 6 members
- The annual audit requirement for SMSFs with good compliance history will be changed to three-yearly.
• Exit fees are to be removed from superannuation accounts when people change funds. • Youngsters under 25 can no longer be forcefully put onto life insurance as part of the superfund from 1 July 2019
- Accounts with a balance of less than $6,000 will have fees capped at 3% from 1 July 2019. • Pensions Loan Scheme opened to all older Australians without impact on pension or benefits. • Expanded Pension Work Bonus from $250 to $300 per fornight to earn up to $7,80-0 each year without impacting their pension. This will be expanded to self-employed retirees.
• Top tax threshold will increase from $87,000 to $90,000 from 1 July 2018. • An increase in the non-refundable Low Income Tax Offset (LITO) will result in tax relief of $200 for those earning up to $37,000, and up to $530, for those earning up to $48,000. The benefit scales back for those earning in the $48,000-$90,000 tax bracket. This will apply from 1 July 2018 to 30 June 2022. • From 1 July 2024, the 37% tax bracket will be removed, so the top of the 32.5% tax bracket goes to $200,000, and anything $200,001+ will attract the 45% tax bracket.
- The Government will remove the option for high profile people (including celebrities and sports players) from splitting their income by being able to licence their fame or image to another entity, such as a discretionary trust. This will apply from 1 July 2019.
• Instant asset writes off for business with a turnover up to $10 million to asset purchases up to $20,000 will be extended for another year. • An overhaul of the R&D Tax Incentive:
For companies with an aggregated turnover below $20 million, the refundable R&D tax offset will now be a premium of 13.5% above the company’s corporate tax rate. This will replace the current 43.5% incentive.
Cash refunds from the refundable R&D tax offset will be capped at $4 million. Any non refunded amounts will be carried forward as a non-refundable tax offset.
- For companies with an annual turnover of $20 million or more, will now depend on the incremental intensity of R&D expenditure as a proportion of the company’s total expenditure for the year.
The marginal R&D premium will be the claimant’s company tax rate plus:
• 4 percentage points for R&D expenditure between 0 per cent and 2 per cent R&D intensity;
• 6.5 percentage points for R&D expenditure above 2 per cent to 5 per cent R&D intensity;
• 9 percentage points for R&D expenditure above 5 per cent to 10 per cent R&D intensity; and
• 12.5 percentage points for R&D expenditure above 10 per cent R&D.
The maximum amount of eligible R&D expenditure that can be claimed under the scheme is proposed to increase from $100 million to $150 million per annum.
• Wage subsidies allocated up to $10,000 for employers who take on older workers.
Please note that the budget measures are pending to legislative approval.
This information is not to be relied upon without speaking to your accountant, tax agent or financial adviser depending on the advice.
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