New rules to prevent foreign residents avoiding tax when they sell certain Australian assets will affect everyone buying or selling property with a market value of $2 million or more. The 10% withholding obligation applies from 1 July 2016. Many transactions involving shares in a company or units in a trust will also be caught.
- New initiatives offer tax incentives for investment in early stage innovation companies.
- Simplified rollover rules commence enabling small businesses to restructure their business operations without triggering adverse implications under the income tax system.
- Farm management deposit scheme changes – increases the maximum amount that can be held in FMDs from $400,000 to $800,000. Easier withdrawals in times of drought without impacting on the tax treatment of the deposit in earlier income years. Amounts held in FMDs will be able to be used to offset loan account balances or the balances of other debts relating to a primary production business carried on by the FMD owner.
Superannuation – SMSFs
Strict compliance rules for collectable and personal use assets apply universally – Any collectables or personal use assets held within your SMSF, regardless of when you acquired them, must meet strict compliance requirements: the asset cannot be leased to a related party; the asset cannot be stored in the residence of a related party; the asset cannot be used for personal use; trustees must record a decision on where the asset is kept; the asset must be insured in the trustee’s name within 7 days.
You & your family
- Large Family Supplement abolished.
- Family Tax Benefit B removed for couples whose youngest child is 13 years of age or over (instead of 18 years). The changes do not affect single parents or grandparents but grandparents must register to continue to receive the payment.
- If you are out of the country, the Family Tax Benefit, child care payments or Double Orphan Pension, and Single Income Family Supplement will now only be paid for 6 weeks (instead of 56) while you are temporarily overseas.
- Higher Education Loan Programme (HELP) debtors residing overseas for 6 months or more need to make repayments of their HELP debt if their worldwide income exceeds the minimum repayment threshold at the same repayment rates as debtors in Australia.
Depending on who wins the election….
Depending on who forms Government, from 1 July 2016 we could also see:
- A company tax rate reduction to 27.5% for companies with turnover under $10 million.
- An increase in the tax discount for unincorporated small business – trusts, partnerships, etc.,
- An increase to the threshold to access certain small business entity concessions to $10m (up from $2m) giving more small businesses access to generous tax concessions.
- Income tax reduction for individuals from 1 July 2016. The 32.5% tax rate will not start until your income reaches $87,000. Currently you start paying this tax rate at $80,000.