I have put together a few summary points form the 2016 budget. The main changes are to superannuation, including a reduction in the concessional contribution cap to $25,000 and the introduction of a lifetime non-concessional contribution cap of $500,000.
The instant deduction for capital items costing less than $20,000 remains until 30 June 2017.
- The small business entity annual turnover threshold will be increased from $2 million to $10 million from 1July 2016 for the purposes of accessing the proposed 27.5 per cent company tax rate and certain existing income tax concessions including the $20,000 instant asset write off.
- From the 2016-17 income year, the company tax rate for businesses with an annual aggregated turnover of less than $10 million will be reduced to 27.5 per cent.
- Simplified depreciation rules under Subdiv 328-D of the Income Tax Assessment Act 1997 (ITAA 1997), including the instant asset write off threshold of $20,000 available until 30 June 2017
- Option to account for GST on a cash basis and pay GST instalments as calculated by the ATO
- Other tax concessions such as the extension of the FBT exemption for work-related portable electronic devices available from 1 April 2016 and the immediate deduction of professional expenses under s 40-880 of ITAA 1997.
- Tax incentives for investing in early-stage innovative companies are to be expanded.
- Funding arrangements to attract more venture capital investment will be expanded.
- The tax treatment of asset backed financing arrangements such as deferred payment arrangements and hire purchase arrangements will be amended.
- The threshold at which high income earners pay additional contributions tax will be lowered to $250,000 from 1 July 2017. The annual cap on concessional superannuation contributions will also be reduced to $25,000.
- The tax exemption on earnings of assets supporting Transition to Retirement Income Streams will be removed from 1 July 2017.
- A lifetime non-concessional contributions cap of $500,000 will be introduced (see more details below).
- Individuals with a superannuation balance less than $500,000 will be allowed to make additional concessional contributions where they have not reached their concessional contributions cap in previous years, with effect from 1 July 2017.
- From 1 July 2017 all individuals up to age 75 will be allowed to claim an income tax deduction for personal superannuation contributions.
- A balance cap of $1.6 million on the total amount of accumulated superannuation an individual can transfer into the tax-free retirement phase will be introduced from 1 July 2017.
Lifetime cap for non-concessional superannuation contributions
A lifetime non-concessional contributions cap of $500,000 will be introduced. To ensure maximum effectiveness, the lifetime cap will take into account all non-concessional contributions made on or after 1 July 2007, from which time the ATO has reliable contributions records, and will commence at 7.30 pm (AEST) on 3 May 2016.
The lifetime non-concessional cap will replace the existing annual caps which allow annual non-concessional contributions of up to $180,000 per year (or $540,000 every three years for individuals aged under 65). Contributions made before commencement cannot result in an excess. However, excess contributions made after commencement will need to be removed or be subject to penalty tax.
GST and other indirect taxes
- GST will be extended to low value goods imported by consumers from 1 July 2017.