Other Budget announcements
1. Changes effective for the 2015/16 income year
1.1 Medicare levy low income thresholds for 2015/16
For 2015/16, the Medicare Levy low income thresholds will be as follows:
Individuals $21,335 (previously $20,896)
Families $36,001 (previously $35,261)
The family income threshold (i.e., $36,001) will be increased by $3,306 for each dependent.
For single seniors and pensioners with no dependants who are eligible for the seniors and pensioners tax offset, the threshold will be increased to $33,738 (previously $33,044).
1.2 Income tax relief for Australian Defence Force personnel deployed overseas
The government will provide a full income tax exemption for Australian Defence Force personnel
deployed on Operation PALATE II in Afghanistan. This income tax exemption has effect from 1
January 2016, and will remain in effect until 31 December 2016.
The government will also update the coordinates for Operation MANITOU in international waters, with effect from 14 May 2015, and Operation OKRA in the Middle East, with effect from 9 September 2015, to reflect the actual areas covered by the operations.
2. Changes effective 1 July 2016 (i.e., 2016/17 income year)
2.1 Targeted personal income tax relief
From 1 July 2016, the government will increase the 32.5% personal income tax threshold from $80,000 to $87,000. This measure will reduce the marginal rate of tax on incomes between $80,000 and $87,000 from 37% to 32.5%, preventing around 500,000 taxpayers facing the 37% marginal
2.2 Increasing the Small Business Income Tax Offset (‘SBITO’)
From 1 July 2016, the government will increase the current 5% tax discount (referred to as the SBITO) to 8%. The discount is currently available to an individual in receipt of income from an unincorporated small business entity (‘SBE’) (i.e., basically, an entity with an aggregated turnover of less than $2 million), and applies to the income tax payable on the business income received from such an entity.
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.
The current tax discount (or SBITO) cap of $1,000 per individual for each income year will be retained.
Furthermore, access to the discount will be extended to individual taxpayers with business
income from an unincorporated business that has an aggregated annual turnover of less than $5 million.
2.3 Reducing the company tax rate over 10 years
The government will reduce the company tax rate to 25% over 10 years (i.e., by 1 July 2026).
This measure will commence from 1 July 2016, whereby the government will cut the small
business company tax rate to 27.5%, and make this tax rate available to small companies with anannual aggregated turnover of less than $10 million.
This turnover threshold will then be progressively increased to ultimately have all companies
eligible for the 27.5% tax rate in 2023/24
In the 2024/25 income year, the company tax rate will be reduced to 27% and then be reduced
progressively by 1 percentage point per year until it reaches 25% in the 2026/27 income year.
2.4 Increasing the small business entity (‘SBE’) turnover threshold
From 1 July 2016, the government will increase the SBE turnover threshold from $2 million to $10
million. The current $2 million turnover threshold will be retained for access to the small business
capital gains tax (‘CGT’) concessions, and access to the SBITO (i.e., the increased 8% tax discount) will be limited to entities with turnover less than $5 million (as noted above).
The increased $10 million turnover threshold will allow an additional 90,000 to 100,000 business
entities to gain access to certain small business concessions, such as the following:
The lower (27.5%) small business corporate tax rate (noted above).
The simplified depreciation rules in Subdivision 328- D of the ITAA 1997 (including the ability to claim an immediate deduction for an asset purchased costing less than $20,000 until 30 June 2017).
Simplified trading stock rules, giving businesses the option to avoid an end of year stocktake if the value of their stock has changed by less than $5,000.
The option to account for GST on a cash basis and pay GST instalments as calculated by the ATO.
2.5 Tax Integrity Package – Establishing the Tax Avoidance Taskforce
The government will provide $678.9 million to the ATO over the forward estimates period to establish a new Tax Avoidance Taskforce. This will enable the ATO to undertake enhanced compliance activities targeting multinationals, large public and private groups and high wealth individuals.
The Tax Avoidance Taskforce will conduct operations to improve tax compliance in high tax risk
sectors, resulting in better targeted audits and higher collections.
The government will also ensure the ATO has access to the information it needs by enhancing
information sharing between the ATO and the Australian Securities and Investments Commission.This supports the operation of the Taskforce through improved risk analysis and detection.
3. Changes effective 1 July 2017 (i.e., 2017/18 income year)
3.1 Applying GST to low value goods imported by consumers
From 1 July 2017, GST will be extended to low value goods imported by consumers. The intent ofthis measure is to ensure that low value goods imported by consumers face the same tax regime as goods sourced domestically.
Overseas suppliers that have an Australian turnover of $75,000 or more will be required to
register for, collect and remit GST for low value goods supplied to consumers in Australia, using
a vendor registration model.
This change requires the unanimous agreement of the States and Territories.