What changed on 1 July 2016?
The new financial year ushered in a number of changes for individuals and business. Here's what changed – and is yet to come – for Australian taxpayers.
The new financial year is here and, as usual, brings with it new rules, initiatives and changes that may affect you. Here is a quick round-up of what is changing:
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. For more information, speak to our International Tax team.
- 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.
- SuperStream compliance – Small businesses have an additional four months to become compliant with the SuperStream scheme, which requires employers to make super contributions for their employees electronically in a standard data set. Speak to your accountant or bookkeeper if you're unsure about how to make sure your business is compliant by October 28.
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.
- 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.
With the Turnbull Government returned, a number of Budget initiatives are likely to be the focus of the Parliament's agenda in the coming months. A quick recap:
- 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 37% tax rate will not start until your income reaches $87,000. Currently, you start paying this tax rate at $80,000.
The composition of both the upper and lower houses means that the Government is likely to have a considerable process of negotiation to get these initiatives through the legislative process. It's a case of watch this space.
For more information or to discuss your tax needs, please contact us on 02 9957 4033.
This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.