1. Catch-up concessional superannuation contributions
Individuals with a superannuation balance less than $500,000 will be allowed to make additional concessional contributions where they have not reached their concessional contributions cap in previous years, with effect from 1 July 2017. Amounts are carried forward on a rolling basis for a period of five consecutive years, and only unused amounts accrued from 1 July 2017 can be carried forward.
2. Staggered cuts to the company tax rate
From the 2016/17 income year, the company tax rate for businesses with an annual aggregated turnover of less than $10m will be reduced to 27.5%. This threshold to access the 27.5% tax rate will be progressively increased to ultimately have all companies at that rate in the 2023/24 income year.
The company tax rate will be progressively reduced to 25% over 10 years.
3. Assistance for unincorporated small businesses
The unincorporated small business tax discount will be increased in phases over 10 years from the current 5% to 16%. First increasing to 8% on 1 July 2016 and remain constant at 8% for 8 years. Further increases will be made to 10% in 2024-25 and 13% in 2025-26, reaching a new permanent discount of 16% in 2026-27. The existing cap of $1,000 per individual for each income year will be retained.
Further, from 1 July 2016, 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, an increase from the current threshold of $2 million.
4. $1.6m superannuation transfer balance cap for retirement accounts
A balance cap of $1.6m on the total amount of accumulated superannuation an individual can transfer into the tax-free retirement phase will be introduced from 1 July 2017. Subsequent earnings on these balances will not be restricted.
5. Small business turnover threshold to increase to $10m
The small business entity turnover threshold will be increased from $2m to $10m from 1 July 2016. The increased threshold means businesses with an annual turnover of less than $10m will be able to access existing small business income tax concessions except the small business capital gains tax concessions.
6. Lifetime cap for non-concessional superannuation contributions
A lifetime non-concessional contributions cap of $500,000 will replace the existing annual caps which allow annual non-concessional contributions of up to $180,000 per year (or $540,000 every three years for individuals aged under 65).
The lifetime cap will take into account all non-concessional contributions made on or after 1 July 2007 and will commence at 7.30 pm (AEST) on 3 May 2016.
7. Restrictions on personal superannuation contribution deductions eased
From 1 July 2017 all individuals up to age 75 will be allowed to claim an income tax deduction for personal superannuation contributions. This effectively allows all individuals, regardless of their employment circumstances, to make concessional superannuation contributions up to the concessional cap.
For further information, contact your Callaghans advisor.