As we all know, tax cut has been proposed for employees. However, it does not come from your pay packet. It is available when you lodge your annual tax return. Government has introduced Low And Middle Income Tax Offset (LAMITO) $530 for those who earn below $90,000. For taxpayers with taxable incomes from $90,001 to $125,333, the offset will phase out at a rate of 1.5 cents per dollar.
Dilruk’s Comment; This is great for low & middle income earners. $10 per week, something better than nothing. This is non refundable tax offset ( If you have not paid any tax, you can’t claim it)
The Government has proposed the following changes to the personal income tax rates:
From 1 July 2024, the Government will extend the top threshold of the 32.5% personal income tax bracket from $120,000 to $200,000. The 32.5% tax bracket will apply to taxable incomes of $41,001 to $200,000 and taxpayers with taxable incomes exceeding $200,000 will pay tax at the top marginal rate of 45%.
Dilruk’s Comment; 6 years to go but it is better for high income earners. Hope everyone’s income will increase in 6 years time.
Business Assets write off $20,000 has extended.
The Government will extend the $20,000 immediate write-off for small business by a further 12-months to 30 June 2019 for businesses with aggregated annual turnover less than $10 million.
Dilruk’s Comment; Fantastic for small businesses, this is straight deduction from your profit. You can claim assets under 20K such as computers, Motor Vehicle or office furniture.
Removing tax deductibility of payments where withholding obligations have been disregarded.
From 1 July 2019, businesses will no longer be able to claim a deduction for the following payments:
- Payments to their employees such as wages where they have not withheld any amount of PAYG
from these payments (i.e., despite the fact the PAYG withholding requirements apply).
- Payments made by businesses to contractors where the contractor does not provide an ABN and
the business does not withhold any amount of PAYG (despite the withholding requirements applying).
Dilruk’s Comment; Not great for small mum & dad business. Usually, we declare wages at the end of the year with available profit. Now look like we need to declare on quarterly basis to get the tax deduction.
Three-yearly audit cycle for some SMSFs
From 1 July 2019, the Government will change the annual audit requirement to a three-yearly requirement for SMSFs with a history of good record-keeping and compliance. This measure will
reduce red tape for SMSF trustees that have a history of three consecutive years of clear audit reports and that have lodged the fund’s annual returns in a timely manner.
Better for SMSF as they can reduce the annual audit cost. This is only good for good compliance super funds.
Deductions denied for vacant land
From 1 July 2019, the Government will deny deductions for expenses associated with holding vacant residential or commercial land, including interest incurred to finance the acquisition of the land. Deductions for expenses associated with holding the land will be available once a property has been constructed on the land, it has received approval to be occupied and is available for rent.
Bad news for property investors, you need to complete your property and available for rent to claim interest deduction.
Compliance activities targeting individuals and their tax agents
The Government will provide $130.8 million to the ATO from 1 July 2018 to increase compliance activities targeting individual taxpayers and their tax agents. The ATO has identified a number of significant compliance issues for individual taxpayers. This measure will continue four income matching programs that would otherwise terminate from 1 July 2018 to allow the ATO to detect incorrect reporting of income, such as foreign source income of high wealth individuals. The measure will also provide funding for new compliance activities, including additional audits and prosecutions, improving education and guidance materials and pre-filling of income tax returns.
Dilruk’s Comment; Challenges to all of us. Regular audit, data matching means ATO could deny your tax claim if you are unable to show proof or work connection. This is where government get their money back. We all wanted to do the right thing, make sure you are covered for tax deduction claim.
This is only a brief what we thought relevant to our clients. Debate will go through parliament and approve by parliament.