2017-2018 Federal Budget Update

 

We at James Gock & Co are here to help you make smart financial decisions now so you can have a beautiful financial future. One way we do that is through careful tax planning! If you haven’t met with us yet, now is the time to contact us to arrange a tax planning meeting, so we can help you limit your tax payments, and grow your wealth.

In prior years, there were many changes to superannuation and small business taxation. This year’s Budget only had a few changes in these areas.

Here’s a brief summary of what the James Gock & Co team believes are the key changes that may affect many of our clients.

 

Taxation

Small business depreciation

The Government will extend by 12 months (to 30 June 2018) the ability for businesses with aggregated annual turnover less than $10 million to immediately deduct purchases of eligible assets costing less than $20,000, first used or installed ready for use by 30 June 2018. Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool (the pool) and depreciated at 15% in the first income year and 30% each income year thereafter. The pool can also be immediately deducted if the balance is less than $20,000 over this period (including existing pools). From 1 July 2018, the immediate deductibility threshold will reduce back to $1,000.

 

Increase in Medicare levy

From July 2019, the Medicare levy will increase by half a percentage point from 2.0 to 2.5 % of taxable income. Other tax rates that are linked to the top personal tax rate, such as the fringe benefits tax rate, will also be increased.

 

Lower threshold for HELP debt repayments

From 1 July 2018, a new minimum threshold of $42,000 will be established with a 1% repayment rate and a maximum threshold of $119,882 with a 10% repayment rate.

 

Disallow certain deductions for residential rental property

From 1 July 2017, the Government will disallow deductions for travel expenses related to inspecting maintaining or collecting rent for residential rental property. Also, plant and equipment depreciation deductions will be limited to outlays actually incurred by the investors in residential real estate properties. These changes will apply on the prospective basis, with existing investments grandfathered. Plant and equipment forming part of residential investment properties as of 9 May 2017 (including contracts already entered into at 7:30PM (AEST) on 9 May 2017) will continue to give rise to deductions for depreciation until either investor no longer owns the asset, or the asset reaches the end of its effective life. Subsequent owners will no longer be able to claim deductions for plant and equipment purchased by its previous owner.

 

Capital gains tax changes for foreign investors

From 7:30PM (AEST) on 9 May 2017, Australia’s foreign resident capital gains tax (CGT) regime will be extended to deny foreign and temporary tax residents access to the CGT main residence exemption. However, existing properties held prior to this date will be grandfathered until 30 June 2019.

From 1 July 2017, there will be an increase in the CGT withholding rate foreign tax residents from 10% to 12.5%, and a reduction of the CGT withholding threshold from $2 million to $750,000.

 

Taxable payments reporting

From 1 July 2018, the courier and cleaning industries will join the building and construction industry in needing to complete taxable payments reporting each year. More red tape!

 

Cash economy crack-down

The ATO now have an additional $32 million to target the cash economy. Expect more ATO audits with the data matching capabilities. Cafés, restaurants and other businesses that accept cash should ensure their point of sale systems have proper audit trails that match their cash deposits.

 

GST on new residential property and sub-divisions

In an approach designed to crack down on some property developers failing to make GST payments to the ATO, property developers will no longer manage the GST on sales of newly constructed residential properties or new subdivisions.  Instead, the Government will require purchasers to remit the GST directly to the ATO as part of the settlement process.

 

Superannuation

Contribute the proceeds of downsizing to superannuation for older Australians

From 1 July 2018, a person aged 65 or over will be able to make a non-concessional contribution of up to $300,000 from the proceeds of selling their home. These contributions will be in addition to those currently allowed under the existing rules and caps and will be exempt from the existing age test, work test and the $1.6 million balance test for making non-concessional contributions.

* This measure will apply to sales of a principal residence owned for the past 10 or more years and both members of a couple will be able to take advantage for the qualifying home. *

 

First Home Super Save Scheme

To encourage home ownership, voluntary contributions to superannuation made by first home buyers from 1 July 2017 can be withdrawn for a first home deposit, along with associated deemed earnings. Concessional contributions and earnings that are withdrawn will be taxed at marginal rates less a 30% offset. Under the measure, up to $15,000 per year and $30,000 in total can be contributed (within existing contribution caps). Contributions can be made from 1 July 2017. Withdrawals will be allowed from 1 July 2018 onwards. Both members of a couple can take advantage of this measure to buy their first home together.

 

Foreign Workers

There has been lots of news recently about the removal of the 457 visa program. Businesses that employ foreign workers on certain skilled visas will pay a levy that will be channelled into the Skilling Australians Fund. From 1 March 2018, Businesses with turnover of less than $10 million per year will make an upfront payment of $1,200 per visa per year for each employee on a Temporary Skill Shortage visa and make a one-off payment of $3,000 for each employee being sponsored for a permanent Employer Nomination Scheme.

 

 

Book in your End of Financial Year Meeting with us Today!

This is just a general summary of how the Budget may affect you. If you haven’t met with us yet, now is the time to contact us to arrange an End of Financial Year meeting, so we can to help you limit your tax payments, discuss your goals and plans for the next year, and grow your wealth. Remember, we both need time to implement any appropriate tax savings strategies for you well before 30 June 2017.

 

 

General advice disclaimer

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

 

 

Do you have your tax debts under control?

      Taxes Due      Tax Debts

Do you have tax debts?

 

From 1 July 2017, a new tax measure will come into play for small businesses, and we’re here to help prepare you for this tax change.

 

Businesses that haven’t engaged with the Australian Taxation Office (ATO) to get their tax debts under control could have their tax debt information disclosed to credit reporting agencies by the ATO.

Initially, the ATO will be applying this new disclosure measure to businesses with a tax debt greater than $10,000 and is in default (at least 90 days overdue). If your tax debt is disclosed by the ATO, your credit rating will be adversely affected for the next 5 years.

 

What do you need to do?

If you have a tax debt that is 90 days or more overdue, you need to secure a payment arrangement with the ATO before 30 June 2017, regardless of how big or small the tax debt is.

We also encourage everyone who has outstanding tax payments not yet in default, to get these paid as soon as possible.

Tax debts, once disclosed to credit reporting agencies, will go on your credit rating file for 5 years which could greatly impact your chances of securing finance in the future or enter in to credit arrangements with your suppliers.

So, it is important to get your tax debts under control as soon as possible, and well before 1 July 2017.

 

How we can help you!

As your tax agent, we can help you negotiate an effective payment arrangement with the ATO without negatively affecting your cashflow.

Get in touch with us today to discuss your options and get control of your tax debts.

 

General advice disclaimer

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

Budget 2016 – Tax Matters Newsletter

We are excited to launch our new company newsletter – Tax Matters!!

This issue is a special 2016 Budget edition.

Inside this newsletter we look at:

  • Industries on the ATO’s radar this year;
  • Federal Budget;
    • Superannuation changes
    • Flexible super
    • Focus on Individuals
  • ATO to focus on collectables;
  • Tax on gifts and donations

Happy reading! If you have any accounting or tax questions, please contact our office on enquiries@gockcpa.com.au.  We’d be happy to help!

businessman calculating growing savings,