Lets be brief (so I will ignore what will be covered in future Budgets)…
The second highest bracket of the marginal tax rate goes from $80,000 to $87,000 on 1 July 2016. So people earning more than $80,000 pay less tax.
The company tax rate for companies with turnover of less than $10 million goes to 27.5% from 1 July 2016 (remember if the turnover was less than $2 million it has been 28.5% since 1 July 2015). Also, the unincorporated tax discount will be increased from 5 per cent to 8 per cent from 1 July 2016 for small businesses not operating through companies.
The government will take on some of the recommendations of the Board of Tax on Division 7A but they give us no idea what these are – but the Board’s recommendations were amazing but were hidden away late last year.
The Small business test will be increased to $10 million… BUT NOT FOR THE SMALL BUSINESS CGT CONCESSIONS… SO this will mean more small businesses can use the simplified depreciation rules, including the ability to claim an immediate deduction for each and every asset purchased costing less than $20,000 until 30 June 2017. Also, more small businesses could do GST on a cash basis.
And then there are the super changes…
Change 1: You can only make $500k of non concessional contributions in your lifetime. If at 3 May you had already done this you can’t make any more. No more $180k (or $540 over 3 years)
Change 2: Concessional cap goes to $25k on 1 July 2017 for everyone. That won’t leave much space for high income individuals to package extra super.
Change 3: If you have less than $500k in super you can use up prior year (up to 4 years ago) unused concessional cap amounts. So if you have $300k in super and have made no contribution in the last four years this proposes to let you put $100k (4x$25k) into super as concessions contributions
Change 4: Div 293 will apply to amounts above $250k, not $300k, from 1 July 2017.
AND MY FAVOURITE CHANGE – Change 5: There will be a $1.6 million balance cap on the total amount of superannuation that can be transferred into the tax-free retirement phase. If you currently have $10 million funding your pension in retirement, you have to get this down to $1.6 million by 1 July 2017 (by a $8.4 million payment to the member who then invests it and gets to pay tax at marginal rates rather than it being exempt). If you reach pension age and have more than $1.6 in your account you can tax the $1.6 million into pension but the remaining amount has to stay in accumulation (at 15% tax rate) and one day will be paid out as a lump sum (or lump sums).
I should also talk about the “Diverted Profits Tax” but it is just an extension of the General Anti Avoidance Rule and so I will save it for another time…