This year’s release marks the 20th edition of our Australian Master Financial Planning Guide. In celebrating this milestone, we will be releasing a series of articles giving you exclusive insight into significant changes covered in key chapters from the Guide.
Chapter 1: Income Tax
- The general company tax rate is 30%. However, where a company carries on a business during the year and has aggregated annual turnover of less than $25 million in 2017/18 a lower tax rate of 27.5% applies
- Small business entities may elect to take advantage of various income tax concessions including the small business restructure roll-over
- The “corporate tax rate for imputation purposes” is generally the entity’s corporate tax rate for the income year of payment worked out on the assumption that the company’s aggregated turnover for the income year is equal to its aggregated turnover for the previous income year. Two new examples have been added
- With effect from 9 May 2017, it is proposed that the main residence CGT exemption will not be available to a temporary or foreign resident, subject to grandfathering of properties held as at that date for sales to 30 June 2019
- New commentary has been added on ATO Law Companion Guidelines and Practical Compliance Guidelines.
Chapter 4: Superannuation
- It is proposed that the Superannuation Complaints Tribunal will be replaced by a new body — the Australian Financial Complaints Authority from 1 July 2018
- The 10% rule, which limited tax deductions for employee contributions, has been abolished from 1 July 2017
- From 1 July 2017, a transfer balance cap limit of $1.6m applies to the amount of capital an individual can transfer to the “retirement phase” to support a superannuation income stream
- An individual may be liable to excess transfer balance tax from 1 July 2017 if their transfer balance exceeds the $1.6m cap
- The transfer balance cap rules have been modified for defined benefit income streams
- A person’s “total superannuation balance” is used from 1 July 2017 to value their total superannuation interests to determine eligibility for various superannuation concessions
- The basic concessional contributions cap is $25,000 for 2017/18. Unlike in previous years, the basic concessional contributions cap applies to individuals regardless of their age
- A person may be liable to additional tax if they receive a pension in excess of $100,000 from a defined benefit income stream that has commutation restrictions from 1 July 2017
- From 1 July 2017, the 10% tax offset for superannuation income stream benefits received by an individual aged 60 or over may be limited
- A roll-over superannuation benefit now includes a superannuation death benefit paid as a lump sum to a dependant of the deceased. Before 1 July 2017, a roll-over superannuation benefit only covered a superannuation member benefit.
The next article in the series highlights Social Security and Compliance, and the following focuses on Family Home and Retirement Planning. Stay tuned and order your 2017 Australian Master Financial Planning Guide today!