A number of changes impact businesses from 1 July 2017 – below is a quick wrap up of the major changes.

Extension of the instant asset write-off

The immediate write-off of concession on depreciable assets with the value of less than $20,000 has been extended to 30 June 2018. From 1 July, businesses with an accumulated turnover of less than $10 million will also be able to access this concession.

Reduction of the corporate tax rate

The progressive reduction of the corporate tax rate will see it reduce from 30 per cent to 25 per cent by 2027. From 1 July, businesses with an annual turnover of $10 million or less will pay a corporate tax rate of 27.5 per cent.

Changes to concessional and non-concessional contributions caps

If any of your employees choose to salary sacrifice from 1 July, the before-tax contributions cap will be reduced. The new cap sits at $25,000 for all employees irrespective of age with an annual $100,000 non-concessional cap and a total of $300,000 allowed in contributions over a three-year period, provided the super balance is less than $1.6 million. For many business owners and individuals, making personal contributions of up to $30,000 to $35,000 will be advantageous ahead of the lowering of the concessional caps from 1 July.

For individuals, superannuation contributions are the main tax planning mechanism, so for any employees within your business, providing a superannuation over and above the 9.5 per cent guarantee should be encouraged, as the amount sacrificed is reduced from their wage rather than being taxed with the wage.

When it is deposited into your employee’s superannuation fund, it is taxed at 15 per cent against whatever their marginal tax rate is, determined by their salary bracket.

Introduction of the $1.6 million transfer balance cap

There will be a balance cap implemented to superannuation accounts that hold more than $1.6 million in the new fiscal year. If your super exceeds the cap, it is important to ensure that the excess is either removed from the account or otherwise it will be subject to a 15 per cent tax rate.

Minimum Wage Changes, and Penalty Rates Reduced

The national minimum wage is set to increase by 3.3 per cent from July 1. The increase of 59 cents per hour to $18.29 — or $22.20 per week to $694.90.  From 1 July, fast food, hospitality, retail and pharmacy workers will have their Sunday penalty rates cut by five percentage points.  Businesses are reminded to ensure their payroll systems reflect these changes which will apply as of 1 July.

If you need assistance implementing any of the changes in your business, please reach out to your PJT advisor.