2016-17 Key Tax Changes

o Small business $20,000 tax break is extended and will be continued in the 2017/18 financial year – Annual turnover of less than $10 million, you can claim individual expenses of up to $20,000 worth of depreciating assets in each single instant write-off each financial year. That $10 million threshold has been raised from the previous $2 million.

o Reduction in the corporate tax rate – The corporate tax rate is reduced from 28.5% to 27.5% for the 2016-17 income year for small business entities. The aggregated turnover threshold to qualify as a small business has been increased from $2 million to $10 million.

o Small business income tax offset (the unincorporated small business tax discount) capped up to $1,000 each year – 8% for the 2016/17 income year onwards and 5% for the 2015/16 income year. To be eligible for the offset, you must be carrying on a small business as a sole trader or have a share of net small business income from a partnership or trust. The small business must have an aggregate turnover less than $5 million for the 2016/17 and $$2 million for the 2015/16 income year.

o Reduction in the corporate tax rate – The corporate tax rate is reduced from 28.5% to 27.5% for the 2016/17 income year for small business entities. The aggregated turnover threshold to qualify as a small business has been increased from $2 million to $10 million. The maximum franking credit that can be allocated to a distribution is based on a corporate tax entity’s applicable corporate tax rate for that income year. This is 27.5% for a small business entity for their 2016/17 income year. Different rules apply to small business entities in the 2015/16 income year.

o Temporary Budget Repair Levy (Sunset) – Legislation passed in 2014 applied the Temporary Budget Repair Levy of 2% to taxable incomes in excess of $180,000 for a period of 3 years from 1 July 2014 until 30 June 2017. Due to removal, the taxable income in excess of $180,000 returns to the top marginal rate of 45% while the FBT rate returns to 47%.

o Simpler BAS from 1 July 2017 – From 1 July some small business will be automatically transferred to Simpler BAS. There are no changes to reporting frequency or how other taxes are reported on the BAS. With Simpler BAS, you only need to report GST information in G1 Total sales, 1A GST on sales and 1B GST on purchases.

o Higher Education Loan Programme recovery of repayments from overseas debtors – HELP and TSL debtors, either going overseas for 183 days or more in a twelve month period or who are already overseas for 183 days or more in a twelve month period, will need to notify the Commissioner. This cohort will be required to report worldwide income in order for an assessment to be made as to whether a compulsory repayment towards their HELP and / or TSL debt is required.

o ATO mobile App – You can record and manage expenses and trips, relating to your work as an employee, your business as a sole trader or other general expenses. You can upload your myDeductions records to your tax return at any time or email a copy to your tax agent. We do not recommend using this to send information to tax office directly. You should use this to email information to your tax agent instead. Also make sure you don’t lose your smart phone.

o Changes to tax residency rules for temporary working holiday makers – From 1 January 2017 a person who is in Australia for a working holiday on a 147 or 462 visa will be subject to tax at a rate of 15% on the first $37,000 taxable income that they derive whilst they are on their visa. Ordinary tax rates will apply after this threshold.

• Single Touch Payroll – Employers with 20 or more employees must start reporting through Single Touch Payroll from 1 July 2018. Employers will need to do a headcount on 1 April 2018. If you have 20 or more employees on that date, you will need to report through a payroll solution that enables Single Touch Payroll from 1 July 2018.