Treasurer Scott Morrison has handed down the 2018 Federal Budget, here’s our round-up of the most significant developments:
- A seven-year Personal Income Tax Plan will be implemented in three steps, to introduce a low and middle income tax offset, to provide relief from bracket creep and to remove the 37% personal income tax bracket.
- Supplementary amounts (such as pension supplement, rent assistance and remote area allowance) paid to a veteran, and full payments made to the spouse or partner of a veteran who dies, are exempt from income tax from 1 May 2018.
- The 2017/18 Federal Budget measure to increase the Medicare levy from 2% to 2.5% of taxable income from 1 July 2019 will not proceed.
- The ATO will be provided with $130.8m from 1 July 2018 to increase compliance activities targeting individual taxpayers and their tax agents.
- The start date of targeted amendments to Div 7A will be deferred from 1 July 2018 to 1 July 2019.
- An exemption from the work test for voluntary contributions to superannuation will be introduced from 1 July 2019 for people aged 65-74 with superannuation balances below $300,000, in the first year that they do not meet the work test requirements.
- Significant changes to the calculation of the R&D tax incentive will commence for income years beginning on or after 1 July 2018. Additionally, a maximum cash refund for “smaller” R&D claimants will be capped at $4m per financial year.
- Deductions for expenses associated with holding vacant land not genuinely used to earn assessable income will be denied from 1 July 2019.
- Businesses can no longer receive cash payments above $10,000 for goods and services, from 1 July 2019.
- Businesses will no longer be able to claim deductions for payments to their employees where they have not met their PAYG obligations or for certain payments to contractors which have not met PAYG obligations.
Wolters Kluwer is hosting two complimentary webinars for tax and accounting professionals looking for a more detailed debrief on the implications of this year’s budget: 2018 Federal Budget: Practical takeaways for accountants (16 May) and 2018 Federal Budget at a glance for Corporate Australia (17 May). Spots are filling up fast register now!