Budget 2016/2017: How it may affect you.
Following the announcement of the 2016/2017 Budget handed down by the Treasurer Scott Morrison last night; we have outlined in this post some of the key areas from the Budget and how you may be affected.
It's important to note that the proposed cuts and changes outlined in the Budget will not necessarily become law – they must first be passed by both the House of Representatives and the Senate.
From 1 July this year, small business tax rate will be lowered to 27.5% and the turnover threshold for small businesses able to access it will be increased to $10 million from $2 million.
Under a 10-year plan, the corporate tax rate will be reduced for all to 25% from 30%.
As in the 2015-2016 Budget, a $20,000 fully tax-deductible equipment purchase will be available for small businesses. This is due to expire on 30 June 2017.
Businesses with a turnover of less than $10 million will also be able to access other tax incentives, including the small business depreciation pooling provisions and Pay-As-You-Go tax installments payments option.
A lifetime non-concessional contributions cap of $500,000 is being applied and there will be an annual cap on concessional superannuation contributions of $25,000.
Low income earners (particularly women who take time off work to have children) will benefit from an offset from July 2017 that ensures those getting less than $37,000 a year are not paying more tax on their superannuation than they are on their income.
The upper limit for the middle income tax bracket to rise to $87,000 from $80,000 from July 1, so rather than being taxed at 37 per cent on every dollar earned over $80,000, workers in this range will stay on the 32.5 per cent rate.
Australian Taxation Office will receive $679 million to help crack down on multinationals, private companies, high wealth individuals, trusts and tax scheme promoters.
There are plans to continue with cuts to paid parental leave that could see 80,000 families up to $11,000 a year worse off.
Families will have to wait at least another year for new streamlined childcare support and the lifting of the child care rebate cap from $7500 to $10k.
The new Child Care Subsidy, announced in the previous Budget, has been pushed back to July 1, 2018.
If you have children in school, the Government has allocated $1.2 billion in additional funding for government and non-government schools, which will be linked to school performance measures.
The Government will establish a $1.7 billion Child and Adult Public Dental Scheme for those most in need.
From July 1 next year members of defined-benefit schemes will be subject to the $250,000 threshold for the high-income contributions tax (which the Government says will affect less than 1 per cent of defined-benefit members in retirement phase).
Pension payments over $100,000 a year paid to members of unfunded defined-benefit contribution schemes will also be taxed at the full marginal rate.
The government will remove the requirement that someone aged 65 to 74 years old has to be working to put money into super.
There will be no changes made to negative gearing and capital gains tax.
In addition to the multi-national corporations, the Government will also seek to recover lost tax revenue by going after high-income earners and companies avoiding tax by moving profits offshore.
Whilst the Government did announce an additional $1.2 billion for schools between 2018 and 2020, it does not meet the funding promised by Gonski at the 2013 election.
A Youth Jobs Path program will be introduced to provide $752 million to get people under 25 and currently on employment benefits skilled to enter the workforce.
The Medicare levy low-income thresholds will be increased to $21,335 (for a single person), so that low income taxpayers can continue to be exempted from paying the Medicare levy.
The Government has put $195 million towards a cyber safety strategy.
For full information on the budget announcement, please contact the team at Bright Wealth or visit http://budget.gov.au/