July sure is a month full of changes.
- Personal tax bracket changes– The top threshold of the 32.5% personal income tax bracket has increased from $87,000 to $90,000*.
- Introduction of the Low and Middle Income Tax Offset*– Tax offset for those with taxable income: now up to $125,333
- GST on property developments and residential subdivisions– The collection of GST on sales of newly constructed residential properties has changed. As part of the settlement process, the ATO will require purchasers to remit the GST directly to them. It is essential that one checks the details first before buying a property, this is to ensure that the new requirements have been managed (see also Business below)
- Single touch payroll– Employers with 20 or more employees whose start date is on 1 April 2018 has started using standard business reporting-enabled software to report payments such as salaries and wages, PAYG withholding and super information. Businesses with 19 or less employees are to use single touch payroll starting 1 July 2019.
- There is an extension for the $20k instant asset write-off for small business. It will now be until 30 June 2019.
- GST on low value goods– GST now applies to overseas sales of goods supplied to Australian consumers with a value under $1,000.
More changes in Business…
- GST on property developments and residential subdivisions– The GST collection on sales of newly constructed residential properties has changed. The vendor no longer collects and remits GST on the purchase price of the residential premises. Rather, the vendor now notifies the purchaser to pay the GST to the commissioner. The notification is done through writing. In most situations, the amount is 1/11th of the contract price. Where the margin scheme is used, it is 7% of the contract price. Where the transaction is between associates, it is 10% of the GST-exclusive market value. Notification rules also apply to the vendor even if the transaction does not trigger a GST liability.
- R&D changes* – the management of the R&D tax incentive has changed with caps introduced on cash rebates. The R&D activities for large companies has also intensified.
- Changes to the Wine Equalisation Tax– the rebate cap has reduced from $500,000 to $350,000, with tightened eligibility criteria.
- SGE definition change*– SGEs are Significant Global Entities. These are establishments producing revenues more than $1bn. Significant Global Entities can also refer to subsidiaries or smaller companies related to it. Special reporting requirements are now in place for these SGEs.
Changes in Superannuation (Super)…
- Event based reporting for SMSFs- All SMSF’s should now report events that affect their members’ transfer balance accounts. When an SMSF member first starts to receive a pension from their fund; the total super balances of the SMSF’s members can determine the timeframes for reporting. Furthermore, where all members of the SMSF have a total super balance of less than $1M, the SMSF can report this information with the annual return. SMSFs that have any members with a total super balance of $1 million or more must report events affecting members’ transfer balances within 28 days after the end of the quarter in which the event occurs.
- Carry forward concessional contributions– People with super balances below $500,000 can rollover their unused concessional caps for up to 5 years. Unused cap amounts are to be carried forward from the 2018-19 financial year; which means the first opportunity to use these new rules will be 2019-20.
- Downsizer contributions– Those over 65 might contribute some of the proceeds of their home sale to super (if one has held its home for 10 years or more and are looking to sell it).
- First home saver scheme– First home savers can withdraw contributions they have made to put towards their first home. These include voluntary and after-tax super.
- Changes to protect employees against inadvertent breaches of concessional caps* – Individuals whose income exceeds $263,157 and have multiple employers can nominate that their wages from certain employers are not subject to the super guarantee (SG).