2018 Federal Budget – The Ins and Outs for you

The 2018 Federal Budget has been touted as an “Election Budget”. There are certainly elements that have the flavour of an election being not far off, however it’s fairly restrained for one at this stage of the cycle.

Please see our 5 minute summary of this year’s Federal Budget.

Should you have any specific questions, please feel free to contact us to discuss.

Key Points

Individuals

• Income tax cuts through changes to the income tax thresholds and tax offsets, the end result being one 32.5% tax bracket that will cover those on incomes from $41,000 to $200,000 from 1 July 2024.
• The first phase of this will be an increase of the upper limit of this threshold from $87,000 to $90,000 from 1 July 2018.
• We welcome this change, as should it be fully implemented, it will simplify the tax rate for the majority of taxpayers and bring individual tax rates more broadly into line with company tax rates.
• The ATO will receive increased funding for increased and ongoing compliance regarding individual tax returns. We expect this will largely focus on work related deduction claims, making it as important as ever that any deductions claimed can be justified.

Businesses

• The $20,000 instant asset write off for small businesses has been extended until 30 June 2019. It was previously due to expire on 30 June 2018.
• From 1 July 2019 any payments for goods or services to businesses that exceed $10,000 will no longer be allowed to be paid with cash, limiting them to having to be paid electronically or by cheque. This does not apply to transactions with financial institutions or between consumers (i.e. non-business). How this is enforced will be interesting.

Superannuation

• Self-managed superannuation funds will now be able to have up to six members from 1 July 2019, an increase from the current limit of four. This will allow for some more flexibility within family groups.
• Self-managed superannuation funds with good record-keeping and compliance histories will be able to have their annual audit moved to a three-yearly audit from 1 July 2019. This will apply if the fund has had three consecutive “clear” audit reports and been on time with their returns being lodged for those three years as well.
• Those aged from 65 to 74 from 1 July 2019 with total superannuation of less than $300,000 will be able to make voluntary contributions in the year after they last met the work test, making it easier for those who have just retired to get additional funds into superannuation for retirement.
• Superannuation funds will be required to transfer inactive accounts with balances of less than $6,000 to the ATO. The ATO will then proactively reunite those funds with active accounts belonging to the taxpayer. Implemented properly, this is a welcome move.