contact Tag financial
Tag financial mailing list
Tag Financial Client Login Client Portal
Join our mailing list
Tag financial on Google plus Tag financial on LinkedIn Tag financial on Facebook

Federal Budget Snapshot and how it effects you – May 2016

Bag with federal budget

Scott Morrison handed down his first Federal Budget on 3 May 2016 for the 2016-2017 year.
Here is a summary of the key budget announcements as they relate to individuals and small business.

The Budget contained significant changes to the superannuation rules.

• Effective immediately, there will also be a new $500,000 lifetime cap on non-concessional contributions (after tax contributions).
From 1 July 2017:
• Workers earning more than $250,000 a year will pay double the rate of tax on their super contributions (15 per cent to 30 per cent).
• Caps on concessional super contributions lowered to $25,000 per year irrespective of age.
• Retirees with super balances over $1.6 million can no longer enjoy tax-free earnings on all their pension assets. While balances in excess of $1.6 million can be retained in Super they will attract 15% tax, similar to accumulation balances.
• Workers earning up to $37,000, will receive a refund of up to $500 in their super account of the amount of tax paid on their super contributions.
• If your employer isn’t allowing you the opportunity to salary sacrifice to superannuation, you’ll be allowed to claim an income tax deduction for personal superannuation contributions in your tax return.
• All individuals up to the age of 75 will be able to claim a tax deduction for personal super contributions irrespective of their employment circumstances.

Business Owners
• From the 1 July this year, small businesses will get a tax cut, with the rate reduced to 27.5 per cent. The threshold for businesses eligible for this will rise from $2 million in annual turnover to $10 million.
The lower rate will be introduced to businesses progressively until it is applied to all businesses by 2023-24. By 2026-27, the rate for all businesses will go to 25 per cent, with the aim of making Australians companies more competitive internationally.
• The SBE (Small Business Entity) threshold will increase to $10 million in annual turnover (up from $2 million) from 1 July 2016. This will allow more business owners access to the small business concessions, including an immediate deduction for assets costing up to $20,000 and the ability to account for GST on a cash basis.

Income Tax
• The income threshold for the middle income tax bracket, will be lifted from $80,000-$87,000. This translates to $6.04 per week or $315 per annum.
• From 1 July 2017, the 2 per cent Budget Repair Levy will be removed, reducing the top tax rate from 49% to 47%.

More Information
For all the Federal Budget’s key initiatives, visit the Federal Government budget website at Federal Budget 2016-2017
If you have any questions after reading this please contact your TAG Financial Services adviser on (03) 9886 0800 or via email.



Latest from the tag blog

Trustee Training Video

July 24, 2017

When you set up a SMSF, you become the trustee of your SMSF.  You can have the fund’s technical aspects handled by qualified experts but you are still the ultimate boss. In this video, Brenda Hutchinson, Partner Superannuation Advisory and Audit, will cover your role and responsibilities of being a trustee and more! Ensure you are the […]