Tax Changes 2018: What do they mean for you & other Australians?

A raft of tax changes for 2018 came into effect on 1st July. They affect many Australians – from individuals to businesses and self-managed superannuation fund owners.

What are the key changes and how might they affect you?

Key tax changes for Australians in 2018

  • Personal tax bracket changes

The top threshold of the 32.5% personal income tax bracket will increase from $87,000 to $90,000*.

  • Introduction of the low and middle income tax offset*

This will provide a tax offset for those with taxable income of up to $125,333.

  • GST on property developments and residential subdivisions

The way that GST is collected on sales of newly constructed residential properties or new subdivisions changed from 1st July.

Purchasers are now required to remit the GST directly to the ATO as part of the settlement process. If you are buying a property, it is essential that you check the details to ensure that these new requirements have been managed (see this issue in the Business section below, also).

Key tax changes in 2018 for Australian businesses

  • Single touch payroll

Employers with 20 or more employees (at 1st April 2018) must use standard business reporting-enabled software from 1st July 2018 to report payments such as salaries and wages, PAYG withholding and superannuation.

Single touch payroll is expected to be compulsory for businesses with 19 or less employees from 1st July 2019.

  • The $20k instant asset write-off for small business has been extended

This has been extended until 30th 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.

  • GST on property developments and residential subdivisions

As for individuals, the way that GST is collected on sales of newly constructed residential properties or new subdivisions changed on 1st July, 2018.

The vendor will no longer collect and remit GST on the purchase price of the residential premises. Instead, the vendor must notify the purchaser in writing that the GST needs to be paid to the Commissioner and advise the amount that must be paid.

In most situations, the amount will be 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 will also apply to the vendor, even if the transaction does not trigger a GST liability.

  • R&D changes*

The way that the R&D tax incentive is managed will change. Caps will be introduced on cash rebates and, for large companies, there will be a refocusing of R&D on high intensity R&D activities.

  • Changes to the wine equalisation tax

The rebate cap will reduce from $500,000 to $350,000 and the eligibility criteria tightened.

  • “Significant global entity” definition change*

Special reporting requirements are in place for significant global entities (SGE) – large global entities with revenues in excess of $1bn or a member of their group.

Many smaller companies that are related to, or subsidiaries of, these large entities are also affected.

The definition will be broadened further to include members of large multinational groups headed by private companies, trusts and partnerships; and members of groups headed by investment entities.

Key tax changes in 2018 for superannuation

  • Event-based reporting for SMSFs

A new reporting regime commences for SMSFs. All SMSFs must report events that affect their members’ transfer balance accounts (for example, when an SMSF member first starts to receive a pension from their fund).

Timeframes for reporting are determined by the total superannuation balances of the SMSF’s members.

Where all members of the SMSF have a total superannuation balance of less than $1 million, the SMSF can report this information at the same time as the annual return. SMSFs that have any members with a total superannuation 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 will be able to rollover their unused concessional caps for up to five years.

Unused cap amounts can be carried forward from the 2018-19 financial year, which means that the first opportunity to use these new rules will be 2019-20.

  • Downsizer contributions

If you are over 65, have held your home for 10 years or more, and are looking to sell, you might be able to contribute some of the proceeds of the sale of your home to superannuation.

  • First home saver scheme

First home savers are able to withdraw voluntary, after-tax superannuation contributions that they have made to put towards their first home.

  • Changes to protect employees against inadvertent breaches of concessional caps*

Individuals with an income exceeding $263,157 and multiple employers will be able to nominate that their wages from certain employers are not subject to the superannuation guarantee (SG).

*Change has been announced but has not become law at the time of writing.

Get help to understand how the 2018 tax changes affect you…

Confused about how these tax changes for 2018 may affect you, your business, or your SMSF?

Please do not hesitate to contact us on (07) 3490 9988 or (07) 5428 9555 and we’d be happy to point you in the right direction.