Everyone
New rules to prevent foreign residents avoiding tax when they sell certain Australian assets will affect everyone buying or selling property with a market value of $2 million or more. From 1 July 2016, the 10% withholding obligation applies.. Many transactions involving units in a trust, or shares in a company will also be caught.
Business
- New initiatives offer tax incentives for investment in early stage innovation companies.
- Simplified rollover rules commence enabling small businesses to restructure their business operations without triggering adverse implications under the income tax system.
- Farm management deposit scheme changes – increases the maximum amount that can be held in FMDs from $400,000 to $800,000. Easier withdrawals in times of drought without impacting on the tax treatment of the deposit in earlier income years. Amounts held in FMDs will be able to be used to offset loan account balances or the balances of other debts relating to a primary production business carried on by the FMD owner.
Superannuation – SMSFs
Strict compliance rules for collectable and personal use assets apply universally – Any collectables or personal use assets held within your SMSF, regardless of when you aquired them, must meet strict compliance requirements: the asset cannot be leased to a related party; the asset cannot be stored in the residence of a related party; the asset cannot be used for personal use; trustees must record a decision on where the asset is kept; the asset must be insured in the trustee’s name within 7 days.
This year’s Budget highlighted the aim of superannuation, which is to provide income in retirement to substitute or supplement the Age Pension. And now, this objective will be written into legislation. The measures announced as part of the Government’s Superannuation Reform Package have been made to align with this objective and improve the sustainability, flexibility and integrity of the superannuation system.
- A lifetime non-concessional contributions cap of $500,000 will be established.
- The annual cap on concessional superannuation contributions will be reduced to $25,000. Unused amounts can be used within the next five years.
- The introduction of a transfer balance cap of $1.6 million on amounts moving into the tax-free retirement phase. Balances will be able to increase above the cap, on account of tax-free earnings, once transferred.
- The work test for those aged 65 to 74 will be abolished from 1 July 2017.
You & your family
- Large Family Supplement abolished.
- Family Tax Benefit B removed for couples whose youngest child is 13 years of age or over (instead of 18 years). The changes do not affect single parents or grandparents, but grandparents must register to continue to receive the payment.
- IF you are out of the country, the Family Tax Benefit, child care payments or Double ORphan Pension , and Single Income Family Supplement will now only be paid for 6 weeks (instead of 56) while you are temporarily overseas.
- Higher Education Loan Programme (HELP) debtors residing overseas for 6 months or more need to make repayments of their HELP debt if their worldwide income exceeds the minimum repayment threshold at the same repayment rates as debtors in Australia.
Depending on who wins the election…..
Depending on who forms the Government, from 1 July 2016, we could also see:
- A company tax rate reduction to 27.5% for companies with turnover under $10 million.
- An increase in the tax discount for unincorporated small business – trusts, partnerships, etc.
- An increase to the threshold to access certain small business entity concessions to $10m (up from $2m) giving more small businesses access to generous tax concessions.
- Income tax reduction for individuals from 1 July 2016. The 32.5% tax rate will not start until your income reaches $87,000. Currently you start paying this tax rate at $80,000.
Here is a round-up of what these changes to property taxes and charges will look like state by state:
NSW
- Foreign buyers of residential property pay additional stamp duty of 4 per cent on transactions from 21 June, 2016. Separate 0.75 per cent land tax surcharge on residential real estate owned by foreigners starts in 2017 land tax year (January).
- Foreign investors no longer entitled to 12-month deferral for the payment of stamp duty for off-the-plan purchases of residential property. Foreigners lose tax-free threshold for land tax surcharge.
- Mortgage duty abolished.
- Duty on the transfer of business assets or a declaration of trust over “business assets” (other than land) will be abolished from July 1, 2016. This will mean that when buying retirement villages, value will need to be apportioned between the land and business assets.
Victoria
- Foreign buyers will pay 7 per cent additional stamp duty on residential property, up from 3 per cent.
- The government has increased the variable rate for the Fire Services Property Levy (FSPL) on industrial property by 11 per cent and commercial property by 6 percent. The variable rate for the FSPL on vacant land will rise 240 per cent.
Queensland
- First Home Buyers Grant to increase from $15,000 to $20,000. Foreign investor changes do not come into effect until October 1.
WA
- No changes
SA
- Stamp duty concessions of up to $15,500 apply for eligible purchases of off-the-plan apartments (effective from June 20, 2016).
Tasmania
- Stamp duty removed from land or asset transfers as part of business reconstruction.
ACT
- Commercial rates: Average increase of 7 per cent in 2016-17 with a fixed charge of $2235.
- Commercial stamp duty: Reductions from 1.8 per cent to 1.48 per cent for transactions up to $200,000; between 3 per cent and 2.5 per cent for $200,00 to $300,000; and reductions from 5.17 per cent to 5.09 per cent above $1.455 million.
- Fire and Emergency Services Levy: A valuation-based charge will apply for commercial properties with progressive marginal rating factors applied to the average of the 2014, 2015, and 2016 AUV values.
- General Insurance Duty: To be abolished.
- Land Tax: Fixed component will rise by $100 and land tax calculation for multi-unit dwellings will be based on total AUV value of the land rather than individual AUV of the unit.
NT
- 50 per cent stamp duty discount for first home buyers of established homes valued up to $450,000 and capped at $10,000 thereafter. This took effect on May 24, 2016, and will continue until June 30, 2017.
Souce: Knowledge Shop & Property Council of Australia
