What’s new in 2017-18 (so far)?
Here’s a list of some significant tax changes applying in the 2017-18 financial year:
Government super contribution for lower income earners:
Under legislation passed in September 2014 the Low Income Superannuation Contribution (“LISC”) benefit ceases on 30 June 2017. Determination of eligible LISC claims will cease on 30 June 2019. However the Budget 2016 contained a similar new measure to commence on 1 July 2017 for which legislation has now been passed, the Low Income Superannuation Tax Offset (“LISTO”)
Spouse super tax offset: The full rebate spouse income threshold has been increased from $10,800 to $37,000 to apply from 1 July 2017, with a shading out on incomes between $37,000 and $40,000. The maximum rebate (calculated at the rate of 18% of maximum rebatable contributions) remains at $540.
Superannuation Caps and Pensions Rules – From 1 July 2017
Modified super contribution cap and retirement rules introduced, starting from 1 July 2017. The changes include:
- The annual concessional contributions cap is fixed at $25,000, non-concessional $100,000 subject to $1.6 million limit on total super balance
- changes to the bring-forward rules, including transitional measures
- transfer balance cap: a limit of $1.6 million on the total superannuation which an individual can move to the tax-free retirement phase
- transition to retirement pensions excluded from the tax-free retirement phase tax-free treatment
Superannuation death benefits – ‘anti-detriment‘ deduction removed from 1 July 2017
First home super saver scheme: Salary sacrifice for first home-owner savers – super contributions made from 1 July 2017 may be withdrawn from 1 July 2018 for a first home deposit.
Residential rental property owners are to be hit with deduction limitations and a foreign owner’s fee under measures proposed in the 2017 Budget:
- Deductions for travel expenses related to a residential rental property not allowed from 1 July 2017
- Depreciation of plant and equipment claims will be restricted to the owner who actually purchased the asset. This will apply prospectively to assets purchased after 7.30pm on 9 May 2017.
- Foreign owners of residential real estate from 9 May 2017 will be hit with an annual vacancy fee where the property is not occupied or genuinely available on the rental market for at least 6 months in 12.
Personal super contributions
The requirement that an individual must earn less than 10% of their income from employment to be able to claim a deduction for personal superannuation contributions has been removed from 1 July 2017.
Higher income earners’ additional tax on super contributions (Div 293 tax): the threshold at which high-income earners pay Division 293 tax on their concessional taxed contribution to superannuation is $250,000 from 1 July 2017 (down from $300,000).
HECS-HELP repayments by overseas graduates
Repayment obligations commence 1 July 2017. From 1 January 2016, for taxpayers who have moved overseas for more than six months.
Working Holiday Maker Visa Holders (“Backpackers”) – Departing Australia
As part of changes introduced in 2017, the Departing Australia Superannuation Tax goes to 65% from 1 July 2017. Non-WHM visa holders remain taxed at 35% or 45%.
CGT and real property disposals by foreign residents
From 1 July 2017 the withholding scheme will be modified:
- threshold (contract price) lowered to $750,000 (previously $2 million)
- withholding tax rate increased to 12.5% (previously 10%)
The main residence exemption (subject to passage of legislation) is to be removed for non-tax residents from 9 May 2017 with a grandfathered period for existing holdings until 30 June 2019.
- The small business instant asset write-off (up to $20,000) has been extended by 1 year to 30 June 2018.
- company tax rate 27.5% for ‘base rate’ companies – those with aggregated turnover under $25 million (up from $10 million).
- FBT rate is 47% (down from 49%) as from 1 April 2017
- simplified BAS returns implemented from 1 July 2017
- Digital currency (bitcoin) to be treated as money from 1 July 2017 to relieve potential double GST.
Affordable Housing Incentives
A Budget 2017 initiative: The MIT investment incentives are to be expanded to allow investment in affordable housing (from 1 July 2017) and individual resident investors will be eligible (from 1 Jan 2018) for a higher capital gains tax discount of 60% (up from the existing 50%).