Budget May 2016
– Super is the area that has been hit the hardest with numerous changes, which will limit and discourage use of Super. Super it is still a great tax environment for retirement savings.
Personal Taxation
– Little change here with an increase in the 32.5% bracket starting point from $80,000 to $87,000.
Business Taxation
– Reduction in company tax rate to 25% over the next 11 years.
– For the year ended 30 June 2017 businesses under $10m will be subject to 27.5%.
– Small business threshold changes from $2m to $10m turnover from 1 July 2016.
– Existing concessions include the immediate tax deductibility of $20,000 assets to 30/06/2017 and deductibility of start up costs and 12-month prepayment rules.
Superannuation
– Concessional contributions cap $25,000 for all individuals from 1 July 2017. The cap was $30,000 or $35,000 for 49 y/o and over.
– Earnings cap removed for individuals; allowing self employed to contribute tax deductible contributions up to $25,000 without Earnings Restrictions.
– Additional 15% super tax threshold lowered to individual earning $250,000 from $300,000.
– A retirement/pension phase cap of $1.6m, your super balances in excess of $1.6m will be taxed at 15%, effective 1 July 2017.
– A lifetime non-concessional cap of $500,000 replaces the $180,000 per year.
Thoughts
– It is a steady as you go budget for a pre election year, not hurting too many voters or not hurting marginal voters any way…
– I hope we get some structural tax reform soon that makes a difference to our Country and creates greater equity in the tax system. Maybe if Mal gets a second term and can show some form he can get the political clout to do this.