The 2016 Budget was handed down last night and as expected it was very bland and the winner was medium businesses to support and carry the economic growth.

The major changes are summarized below, should you have any questions on this, please don’t hesitate to ask.

TAXATION

  •  From 1 July 2016, the government will increase the 32.5% personal income tax threshold from $80,000 to $87,000.
  •  From 1 July 2016, the government will increase the current 5% tax discount (referred to as the SBITO) to 8%.The discount will remain constant at 8% for eight years, and will then increase to:10% in 2024/25; 13% in 2025/26; and   16%    from 2026/27.
  •  From 1 July 2016 Company tax rate will reduce to 27.5% and to 25% over 10 years.
  •      From 1 July 2016 Businesses with a turnover of up to $10m will now pay tax at 27.5%
  •  From 1 July 2016 Businesses with a turnover of up to $10m can now access the automatic deduction for assets under $20,000.
  •  From 1 July 2016 Businesses with a turnover of up to $10m can now account for GST on a cash basis.
  •  The 2 per cent deficit repair levy on those earning above $180,000 will be abolished as promised on July 30, 2017.
  •  Pausing indexation of Medicare levy surcharge and private health insurance rebate.

SUPER

  •  From 1 July 2017 the annual cap on concessional (pre-tax) super contributions will reduce to $25,000, regardless of age.
  •      From 1 July 2017 Transition to retirement (TTR) will no longer receive tax free treatment on earnings and will be required to pay 15% tax on earnings.
  •      From 1 July 2017 spouse contributions will remove the work test restrictions and raise the lower income threshold to $37,000.
  •      From 1 July 2017 all individuals up to the age of 75 can claim an income tax deduction for personal super contributions.
  •      From 1 July 2017 individuals aged 65-74 can now contributed to super and not have the meet the work test.
  •      From 1 July 2017 the Government will lower the Division 293 threshold (the point at which high income earners pay additional 15% tax on contributions) from $300,000 to $250,000.
  •      From 1 July 2017 A lifetime limit of $1.6m will be placed on the amount of superannuation that can be transferred to start pensions.
  •      From 3 May 2016 a lifetime limit on non-concessional contributions of $500,000.
  •      From 1 July 2017 individuals with a super balance under $500,000 can carry forward unused concessional caps rolling forward for a period of 5 years. In simple if in FY 2018 you only put $10,000 into super the next FY year you can  put in $40,000. The $15,000 remainder form the year before and the $25,000 for that current year. It will all be taxed at 15%.

FAMILIES

  •  Deferral of reforms to Child Care rebates until 1 July 2018.

EDUCATION

  •  Reforms to the higher education debt of HELP & HECS in 2018