The biggest change in the budget is to correctly define a “small business”, that now being defined as one with a turnover of less than $10mill.
The concessions that were available to only some of the small businesses, are now available to all small businesses they include:
- 27.5% tax rate from 1 July 2016
- The immediate write off of asset purchases under $20,000
- To account for GST on a cash basis. This way GST is not paid until you are paid by your customer
However, labour wishes to maintain the faulty definition of small business and leave it at $2mill.
Unincorporated small businesses will receive some concessions as well which helps the budget:
- They will receive a tax discount of 8% up to a maximum of $1,000. While the 8% equates to the same benefit as companies receive, companies have no upper limit. The use of a company in your structure is going to become increasingly important.
- The threshold will gradually increase. In 2017 year it will rise to $25mill, 2018 to $50mill, until 2023 where it will include all companies
- Then the tax rate will drop over the next 3 years to 25%, bringing in parallel with this the discount of tax will increase to 16%
The bracket creep is being partly addressed by increasing the top of the 32.5% tax bracket from $80,000 to $87,000 from 1 July 2016.
Superannuation changes from 1 July 2017. Will this affect your budget?
- Those with taxable incomes and super contributions over $250,000 will have super contributions taxed at 30% instead of 15%
- Concessional contributions will be $25,000 for all. Those over 50 will no longer be able to put in $35,000
- Catch up contributions will be allowed in future years where you have not put in the full $25,000, up to a maximum of $50,000 – where super balances are under $500,000
- Lifetime cap of non-concessional contributions of $500,000
- Limit of $1.6mill allowed for each member in superannuation funds
- Those over 65 will now be able to make tax-deductible contributions to super, up to age 75 and there will be no work test
- Member funds that are in a Transition to Retirement Phase will no longer have tax free earnings. Only those that have retired and those 60 or over will have the opportunity to have tax free earnings
Of significance to our region, the Inland Rail receives an additional $594,000 on top of the $3.2mill already allocated for land acquisition and pre-construction work this coming financial year.
A constructive initiative to youth unemployment is to scrap the “work for the dole scheme”, which provided minimal benefits to the unemployed, it has been now replaced that with the Youth Jobs PaTH (Prepare, Trial, Hire). Providing the following to unemployed youth:
- Gives them practical pre-employment skills
- Provides up to 120,000 internship placements where they earn $200 per fortnight on top of New Start
- A $6,500 bonus for those business that employ an intern and in some cases $10,500