Changes to the marginal tax rate
From 1 July 2018, the 32.5% upper threshold is proposed to increase from $87,000 to $90,000. This would increase to $120,000 from 1 July 2022, before increasing again to $200,000 from 1 July 2024.
According to the Treasury, this will mean that when these increases are implemented and combined with the tax offset, 94% of taxpayers will be on a marginal tax rate of 32.5%.
Low and middle income tax offset
The Government will also introduce the low and middle income tax offset which will apply from 1 July 2018 to 30 June 2022. The offset will be based on your income as shown in the table below:
|Taxable income per year||Offset available per year|
|Up to $37,000||$200|
|$37,001 to $48,000||$200 plus 3 cents for every dollar over $37,000|
|$48,001 to $90,000||$530 flat|
|$90,001 to $125,333||$530 less 1.5 cents per dollar over $90,000|
|$125,334 or above||No rebate available|
This will be paid in addition to the current $445 Low Income Tax Offset.
You will continue to be able to write off business assets of up to $20,000 until 30 June 2019. This measure was due to expire at 30 June this year.
To crack down on the black economy – which is when cash is used to make payments so tax can be avoided – from 1 July 2019, payments in cash for good and services over $10,000 will be banned. From the same date, business owners will no longer be able to make tax deductions where they have not withheld any amount of PAYG in their staff payments, or where a contractor does not supply an ABN.
From 1 July 2019, you will no longer be able to claim a tax deduction on vacant land.
Protecting your super
From 1 July 2019, exit fees will be banned on all super accounts, regardless of the balance, making it easier to consolidate multiple super accounts. For accounts with a balance of under $6,000, fees will be capped at 3%, or $90 per six months.
People who have accounts with a balance of under $6,000 and have been inactive for more than 13 months, will have their account balances automatically transferred to the ATO who will then ‘proactively’ merge this balance with active accounts that have a balance over $6,000.
Automatic insurance cover will be banned for new accounts where the member is under age 25, for accounts under $6,000 and where accounts have been inactive for 13 months.
Self-managed super funds
From 1 July 2019, self-managed super funds (SMSFs) and small APRA funds (SAFs) will be able to increase the number of members from four to six. SMSFs who have clear audit reports for three consecutive years will be able to move to a three-year audit cycle.
From 1 July 2019, members aged between 65 and 74 who have super balances below $300,000 will be able to make voluntary contributions in the first year that they do not meet the work test requirements.
The information has been prepared by Bridges Financial Services Pty Limited (Bridges)
ABN 60 003 474 977 AFSL No. 240837.
The information is provided for general information only, it is not advice. It has been prepared without taking into account your particular financial needs, circumstances and objectives. You should consult your own financial adviser before making any investment decisions.