The below checklist outlines significant changes that are scheduled to operate from the 2017/18 income year. In some cases, implementation of these changes will be dependent on the passing of necessary legislation.
SMALL BUSINESSES AND COMPANIES
- From 1 July 2017, the concessional corporate tax rate of 27.5% will only be available for ‘‘base rate entities’’, being entities with no more than 80% of its income being ‘‘base rate entity passive income’’.
- The ATO will be able to disclose to Credit Reporting Bureaus the tax debt information of a business that has not effectively engaged with the ATO to manage these debts from 1 July 2017.
- Simplified BAS reporting applies to small business entities from 1 July 2017.
- The tax on working holiday makers’ superannuation payments when they leave Australia is 65%, from 1 July 2017.
- The low income superannuation contribution scheme is abolished from 2017/18; a low income superannuation tax
offset will be available for 2017/18 and later years.
- A $1.6m transfer balance cap applies to the total amount of accumulated superannuation an individual can transfer
into the tax-free retirement phase from 1 July 2017; excess transfer balance tax is payable for exceeding the cap.
- The threshold at which high income earners are liable for Division 293 tax has been lowered from $300,000 to
$250,000 from 1 July 2017.
- The annual cap on concessional contributions has been reduced to $25,000 from 1 July 2017 for all individuals
regardless of their age.
- From 1 July 2017, the annual non-concessional contributions cap has been reduced to $100,000; individuals with a
superannuation balance of more than $1.6m are not eligible to make non- concessional contributions from 1 July 2017.
- The 10% test to determine an individual’s eligibility for deductions for personal superannuation contributions has
been removed from 1 July 2017; contributions to certain prescribed funds are not tax-deductible.
- Eligibility for the spouse contributions tax offset has been extended to individuals whose spouses earn up to
$40,000 from 1 July 2017.
- The tax exemption for income derived from assets has been changed to apply only to income streams in the
retirement phase. Individuals can not treat superannuation income stream payments as lump sum superannuation
benefits for tax purposes from 1 July 2017.
- The anti-detriment provision, which allows superannuation funds to claim a tax deduction for a portion of the death
benefits paid to eligible dependants, has been removed from 1 July 2017.
- Transitional CGT relief applied for assets transfers in connection with changes to the tax treatment transition to
retirement income streams and compliance with the superannuation transfer cap.
- An individual’s total superannuation balance concept is used to determine eligibility for various tax concessions
from 1 July 2017.
- The diverted profits tax (DPT) applies to tax benefits under a relevant scheme derived in income years commencing
on or after 1 July 2017.
- Failure-to-disclose penalties have been increased for significant global entities, with effect from 1 July 2017.
- The foreign investment framework will be clarified and simplified with effect from 1 July 2017 to make foreign investor obligations clearer.
CAPITAL GAINS TAX
- The CGT foreign resident withholding rate is 12.5% from 1 July 2017 (previously 10%) and the threshold at which the
CGT withholding obligation applies to Australian real property has been reduced to $750,000 (previously $2m).
- A 60% discount is proposed to be available from 1 January 2018 for a resident individual from investments, either
directly or indirectly through certain trusts in qualifying affordable housing.
- The principal asset test will be applied on an associate inclusive basis for foreign tax residents with indirect
interests in Australian real property from 7.30 pm (AEST) 9 May 2017.
- The CGT main residence exemption will no longer be available to foreign and temporary tax residents from 7.30 pm
(AEST) on 9 May 2017.
- From 1 July 2017, CGT event E4 will not arise where a trust receives a tax-free capital gain under the early stage
innovation company provisions.
GOODS AND SERVICES TAX
- GST extends to cross-border supplies of services and intangibles, such as digital products, to Australian consumers
from 1 July 2017.
- The definition nof ‘‘financial supply’’ has been extended to include the supply of bank accounts and superannuation
interests by foreign financial institutions from 1 July 2017.
- The GST treatment of digital currency such as bitcoin has been aligned with that of money from 1 July 2017 to avoid
potential double taxation.
- GST reporting and record-keeping has been simplified from 1 July 2017 for small businesses with a turnover of less
- Managed investment trusts will be allowed to invest in affordable housing from 1 July 2017.
- From 1 July 2017, travel expenses related to inspecting, maintaining or collecting rent for a residential rental property will be disallowed.
- From 1 July 2017, travel expenses related to inspecting, maintaining or collecting rent for a residential rental property are not deductible.
- Eligibility for deductions for second-hand depreciating plant and equipment in a residential rental property will be limited for certain types of taxpayers. Generally, only the entity that actually incurred the outlay to purchase the
plant and equipment can claim the deduction and not successive investors in the property, from 1 July 2017.
- From 1 July 2017, the Commissioner will limit a taxpayer’s PAYG instalment rate in cases where the normal rules would otherwise produce a very high rate.
- Primary producers are allowed to access income tax averaging 10 income years after choosing to opt out, instead of that choice being permanent from 2016/17.
- The junior mineral exploration tax credit (JMETC) will replace the exploration development incentive (EDI) from 2017/18.
- Foreign owners of residential real estate are liable to pay a vacancy fee where a residential property is not occupied or genuinely available on the rental market for at least six months in a 12-month period. The fee applies to applications to acquire a residential dwelling or land from 7.30 pm (AEST) on 9 May 2017.
- From 1 January 2018, residential properties in metropolitan Melbourne that are left vacant for six months in the calendar year will be subject to a Vacant Residential Property Tax at a rate of 1% of the property’s capital improved value.
- For 2017/18 a new Queensland absentee surcharge applies at the rate of 1.5% of the taxable value of land in excess of $349,999.