Money Doesn’t Come Without Guidance ...


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The main drive of the budget is simple: enhance job growth by targeting small to medium business with tax cuts and incentives, then pay for it through refinements to the superannuation system. Unlike most budgets of recent years, low income earners have been left largely alone with only a nominal change to the low-income Medicare levy thresholds. The Budget takes important steps to modernise Australia’s tax and superannuation systems. Australian tax lodgement is one of the technologically advance lodgement system in the world. Now most of the tax payers are filing their tax return online. There are some changes in the tax return lodgement in 2016 which every tax payer needs to know especially those who intend to file online tax return. The Key tax changes in 2016 are mentioned below:

Simplified depreciation for small business: Small businesses can immediately deduct the business portion of most assets if they cost less than $20,000 and were purchased between 7:30pm on 12 May 2015 and 30 June 2017. They can claim the deduction through their tax return. They can also immediately deduct the balance in the small business pool if it is less than $20,000 at the end of an income year that ends on or after 12 May 2015 to 30 June 2017.

Individual Tax Bracket Change: The first is for what the government terms ‘hard working Australians’ on the average wage of $80,000 per year. For these, the 37% tax bracket, which currently kicks in at $80,000, will now start at $87,000.

Company Tax Rate: The current rate is 30%, with a concessional rate of 28.5% applying to business with a turnover of less than $2 million. The rate is being reduced to 27.5% for the 2016–17 year for those with a turnover of less than $10 million. The company tax rate remains at 30% for all other companies that are not small business entities.

Small Business Tax Discount: In conjunction with the company tax rate decrease, the tax discount on unincorporated business, currently at 8%, will be lifted to 16% for business with a turnover of less than $5 million.

Low Income Superannuation Tax Offset: Low income earners who are below the tax free threshold find that contributions made into superannuation incur a tax rate of 15%, so it actually costs them to put money into superannuation. From 1 July 2017 up to $500 of this cost will be available as a tax offset for those with an adjusted taxable income of less than $37,000.

Net medical expenses tax offset phase-out: From 1 July 2015, the offset can only be claimed by taxpayers with net expenses for disability aids, attendant care or aged care. The offset is income tested. The offset will be abolished from 1 July 2019.

First home savers accounts abolished: First home saver accounts (FHSA) were abolished on 1 July 2015 and became ordinary savings accounts. Account holders must include earnings in their tax returns. Account providers don't pay tax on FHSA earnings for any period after 30 June 2015.

Report of entity tax information: From December 2015, under the income tax transparency reporting requirements, the Commissioner of Taxation will publish an annual list of:

  • Public and foreign owned corporate tax entities with total income of $100 million or more;
  • Australian-owned resident private entities with total income of $200 million or more.

GST on Imports: The government will now require overseas suppliers who sell more than $75,000 worth of goods in Australia to register for GST. While increase tax revenue, this will also potentially increase the price of low-value goods bought through international eBay stores and the like.

Increasing access to company losses: On 7 December 2015, the government announced, as part of its National Innovation and Science agenda, that the current ‘same business test’ for company losses will be relaxed to allow businesses to access past year losses when they have entered into new transactions or business activities.

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