2016-17-18

Hereunder are a few important changes for the 2016-17 income tax year.

1. Targeted personal tax relief: From 1 July 2016, the marginal tax rate of 37% starts at $87,000, instead of $80,000.

2. Reportable fringe benefits: The government has changed how reportable fringe benefits are included in your adjusted taxable income for family assistance and youth income support payments.

3. Expanded access to small business concessions: From 1 July 2016, gross income of small businesses threshold increased from $2 million to $10 million.

4. Small business income tax offset: from 1July 2016, the discount rate for the tax offset increased to 8%
{previously 5%) with a limit f $1,000 each year. The offset applies to those with gross income of less than $5 million (previously $2 million).

5. Employee transporting bulky work tools: qualification for deductibility of travel expenses between home and work where the employee’s car is loaded with bulky work tools or heavy equipment has been simplified, i.e. travel is attributable to transporting the bulky tools/equipment rather than the
employee.

6. Employees travel to short-term jobs (typically applicable to Sales Reps): Travel expenses from home to short-term jobs, e.g. employee’s duties are carried out at several places, employee continually travels from one work site to another sites, can be accepted as tax deductible .

7. ATO’s individual audit hot spots for 2017 include:
(a) Unusually high work- related expenses claims;
{b) Rental properties – excessive claims for holiday homes, weekend retreats, travel claims particularly interstate properties and claiming holding costs {e.g. interest, rates and land tax) while property is being built, renovated, repaired, etc. and
{c) ‘Lifestyle’ assets, e.g. boats, motor vehicles and artwork – to identify potential instances of non-compliance with income tax, capital gains, fringe benefit tax and GST.


2017-18

Please note that there are a few important changes for the 2017-18 “I” return, as follows:

  1. Claiming deductions for personal super contributions – individuals making a claim at Item D12 in respect of personal super contributions made during the 2018 income year will need to show that they have provided their super fund with a valid Notice of Intent to claim a deduction and that the individuals were in receipt of an acknowledgement of their notice from the trustee(s) of their fund.  If this requirement is not available, then No deduction can be claimed.
  2. Claiming Cost of Managing Tax Affairs – This deduction claimed at Item D10 has now been split in three sub-components, as follows:
  • Label N – Interest charge by ATO (e.g. SIC, GIC and late payment interest)
  • Label L – Litigation costs  (cost of court and Administrative Appeals Tribunal fees, solicitor, barrister and other legal costs incurred by a taxpayer in managing their tax affairs).
  • Label M – Other expenses incurred in managing your tax affairs (e.g. other tax-related costs not covered by labels N and L above, such as Tax Agent’s fees),

 

  • Claiming for Recoupment of tax-related expenses  – at Item 24  Other Income, a new Label X is added to capture assessable recoupment of tax-related expenses (e.g. the remission of part or all of deductible ATO interest charges such as the remission of previously imposed General Interest Charge (GIC) and  Shortfall Interest Charge (SIC).
  • ATO’S individual audit targets for 2018 include: (1) Work-related expense claims – ATO will focus on unusually high work-related expenses, expense claims that do not require written evidence (e.g. home laundry); (b) Airbnb operators (or hosts) – ATO will ensure that taxpayers receiving this income are correctly declared and expenses are correctly claimed (and apportioned if relevant);  (c) Capital  gains tax issues with applying the main residence exemption for income-producing dwellings –  the correct application of the main residence exemption is likely to be greater scrutinised by ATO.
  • Extending the $20,000 immediate write-off for small business to 30 June 2019.
  • Medicare levy to remain unchanged at 2% of taxable income until 30 June 2019.

 

(Source:  Excerpts from NTAA’s seminar notes June 2018)

DISCLAIMER:  Some comments in the above notes are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information applicability to their own circumstances.

 

 


2018-19

Most recently, here are some highlights of Budget 2018-19 handed down by the treasurer on Tuesday, 8 May 2018:

1. Protecting middle income Australians from bracket creep

The Government has proposed the following changes to be personal income tax rates:
1. From 1 July 2018, the Government will increase the top threshold of the 32.5% personal income tax bracket from $87,000 to $90,000. The rates below do not include the Medicare Levy.
2. From 1 July 2022, the Government will:
– extend the 19% personal income tax bracket from $37,000 to $41,000; and
– further increase the top threshold of the 32.5% personal income tax bracket from $90,000 to $120,000

2. Extending the $20,000 immediate write-off for small business

The Government will extend the $20,000 immediate write-off for small business by a further 12-months to June 2019 for businesses with aggregated annual turnover less than $10 million.

(Source: NTAA 2018/19 Federal Budget)