Australian Budget 2017: At A Glance


Treasurer Scott Morrison handed down the 2017-18 Australian Federal Budget at 7:30pm on Tuesday, 9 May 2017.

Business

  • The Corporate Income Tax Rate remains at 30%.

Small and medium enterprises (SMEs) with an annual turnover of up to $10 million will be able to enjoy the reduced corporate tax rate of 27.5% for the 2016-2017 tax year ending 30 June 2017.  This group will be able to enjoy a corporate tax rate relief of either 1% or 2.5%. For the last two tax years, SMEs with an annual turnover below $2 million enjoyed a 28.5% corporate tax rate.

  • No changes to SMEs enjoying the reduced corporate tax rate being able to have a maximum franking credit rate of 30%.

  • Small business entities $20,000 instant asset write-off will be extended for another 12 months to 30 June 2018.

  • From 1 July 2017, small business CGT concessions will be restricted to assets used in a small business or ownership interest in a small business.

  • From 1 July 2017, a new major bank levy of 0.015% per quarter (0.06% pa) will apply to Approved Deposit-taking Institutions (ADIs) with licensed entity liabilities of at least $100 billion.

Property

  • From 1 July 2017, Managed Investment Trusts (MITs) will be allowed to invest in affordable housing: investors in such MITs will receive concessional tax treatment if certain conditions are satisfied. Resident individuals will qualify for 60% CGT discount.

  • From 1 July 2017, travel expenses for residential investment property will no longer be tax deductible.

  • From 9 May 2017, there will be a limit on plant and equipment depreciation deductions to outlays incurred by investors for their residential investment property.

  • An annual charge or "ghost house tax" will be imposed on foreign investors whose Australian residential properties are not occupied or not genuinely available for rent for at least 6 months per year.

  • From 9 May 2017, foreign and temporary tax residents will no longer be able to claim the CGT main residence exemption when they sell property in Australia. Foreign and temporary tax residents who hold property on Budget night can continue to claim the exemption until 30 June 2019.

  • From 1 July 2017, CGT withholding tax rate for foreign tax residents will increase from 10% to 12.5%.

Superannuation

  • Person aged 65 or over who downsizes by selling the family home will be able to make up to $300,000 non-concessional superannuation contribution from the proceeds from 1 July 2018 and exempted from the new superannuation limits.

  • The current tax relief for merging superannuation funds will be extended until 1 July 2020.

  • Related party transactions on non-commercial terms to increase superannuation savings will be scrutinised.

GST

  • From 1 July 2018, purchasers of newly constructed residential properties or new subdivisions to remit GST directly to the Australian Tax Office (ATO).

  • Purchases of digital currency are no longer subject to GST – to avoid double taxation and to grow the Financial Technology (Fintech) sector in Australia.

  • Entities buying gold, silver and platinum that have been supplied as a taxable supply will be required to apply a reverse charge and remit the GST to the ATO instead of the seller.

Personal

  • Medicare levy will increase by 0.5% to 2.5% from 1 July 2019.

Compliance-Tax Avoidance

  • Aggressive tax minimising structures used by banks and financial institutions through hybrid mismatching in cross border transactions relating to regulatory capital, viz. Additional Tier 1 to be clamped down.

  • The multi-national anti-avoidance law (MAAL) will be toughened to negate the use and interposition of foreign trusts and partnerships in corporate structures to circumvent anti-avoidance law effective from 1 January 2016.

  • The ATO will receive additional funding to target serious and organised crime in the tax system especially in audit and compliance programs to better target the black economy.


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