Small business concessions
The small business company tax rate will be cut from 28.5% to 27.5%, and increases in small business turnover threshold from $2 million to $10 million (except for small business CGT concessions and small business tax discount).
Unincorporated small business tax discount will increase from 5% to 8% from 1 July 2016, income. In addition, the annual aggregated turnover threshold for this discount will increase from $2 million to $5 million. However, the discount amount continues to be capped to $1,000 per individual.
Individual tax cuts
From 1 July 2016 there will be individual tax cuts for individuals with over $80,000 taxable income. This is as a result of the increase in the 32.5% marginal tax rate threshold increasing from $80,000 to $87,000.
Concessional contributions cap
From 1 July 2017 superannuation concessional contributions caps will be reduced to $25,000 per year. Consider contributing before 1 July 2016 and again before 1 July 2017 to use the current higher contribution caps.
Maximum pension account contributions
Superannuation pension account with balances of more than $1.6 million as at July 2017 must be reduced to $1.6 million. Transfers to the pension account after that date cannot be made if they increase the pension balance by more than $1.6 million.
Transition to retirement pensions
Superannuation transition to retirement income streams (TRIS) pensions will no longer be tax free from 1 July 2017.
Non-concessional contributions cap
The superannuation non-concessional cap is to be restricted to a $500,000 life time cap applicable from Budget night 3 May 2016.
The rate for superannuation contributions by employers on behalf of their employees under the superannuation guarantee contributions (SGC) for the year ended 30 June 2016 is 9.5%. Employers must make SGC for their employees on a quarterly basis within 28 days after the end of each quarter.
Unpaid trust distributions
Trust distributions to a private company for the 2015 tax year, which are unpaid at end of the 2016 tax year, may be a Division 7A loan unless paid out to the company or converted to a complying Division 7A loan by the lodgement date of the company’s 2016 tax return, or held in sub-trust for the company by the lodgement date of the trust’s 2015 tax return.
If the unpaid distribution for the 2014/15 tax year has been converted to a sub trust ensure the trustee has paid the company all the income under the sub trust before 30 June 2016.
Trust distributions and resolutions
Most discretionary trust deeds require distribution determinations for 30 June year-end be made before 30 June, or earlier. Trustees must make these determinations prior to 30 June or the date in the deed if earlier than 30 June.
Under the streaming provisions, trustees can stream franked dividends and capital gains to specific beneficiaries, rather than distributing these amounts as part of the general distribution to beneficiaries.
The deed must not prevent the trustee from streaming these amounts to specific beneficiaries. In addition, the beneficiaries who are to receive these amounts must be specifically entitled to them, and the trustee must record the streamed distributions in the accounts or records of the trust, by 30 June 2016 for franked dividends or by 31 August 2016 for capital gains, although the trust deed will usually require the trustee’s distribution determination to be made by 30 June 2016.