Overview of proposed changes from the Federal Budget 2017
(Please note: Some of these proposals are still being debated within the government and have not yet been legislated)
- Some tax relief for taxpayers with changes to the marginal tax rates.
- Proposed increase to the Medicare levy from 2% to 2.5% in 2018.
- A slight increase in the Medicare levy low-income threshold from the 2016-17 income year means that low-income households will not pay the Medicare levy if their taxable income is below a statutory low-income threshold as mentioned below.
- Measures for first home buyers to help them save up for their first home by salary sacrificing their pre-tax income to be contributed into their super fund as part of their savings towards the deposit for their first home.
- Closing off generous superannuation tax concessions for Australia’s most wealthy and better targeting superannuation tax concessions to support working Australians build independent wealth for their retirement.
- Lowering of company tax rates for Australian businesses.
- The $20,000 instant asset write-off for small business will be extended by 12 months to 30 June 2018 for businesses with an aggregated annual turnover of less than $10m.
Things to consider for the 2016 – 17 income year
1) Changes to the marginal thresholds are as below:
|Taxable Income Threshold range 2015 – 2016 ($)||Taxable Income Threshold range 2016 – 2017 ($)||Marginal Income Tax Rates|
|Less than 18,200||Less than 18,200||0|
|18,201 – 37,000||18,201 – 37,000||19%|
|37,001 – 80,000||37,001 – 87,000||32.5%|
|80,001 – 180,000||87,0001 – 180,000||37%|
|More than 180,000||More than 180,000||45%|
2) Medicare levy low income threshold changes are as below, for taxpayers whose income is below the low income thresholds below the Medicare levy does not apply:
|Low-income Threshold 2016||Low-income Threshold 2017|
|Single tax payer||$21,335||$21,655|
|Single taxpayer eligible for SAPTO (Pensioners)||$33,738||$34,244|
|Family combined income with dependant(s)||$36,001 plus $3,306 for each dependant||$36,541 plus $3,356 for each dependant|
|Family combined income with dependant(s) eligible for SAPTO (Pensioners)||$46,966 plus $3,306 for each dependant||$47,670 plus $3,356 for each dependant|
3) Tax relief for first home buyers:
From 1 July 2017, first home buyers can save for their first home deposit by being able to salary sacrifice into their super fund. In specific, first home buyers can contribute up to $15,000 per year and $30,000 in total from pre-tax income, then they can start withdrawing those funds from 1 July 2018 onwards. These contributions will only be taxed at 15 per cent in the super fund and the withdrawals taxed at first home buyers’ marginal rate, less 30 percentage points.
4) Changes in superannuation from 1 July 2017 are summarised below:
- You will be able to claim the maximum tax offset of $540 if you contribute to an eligible super fund of your spouse, whether married or de-facto, and your spouse’s income is $37,000 or less (the spouse’s income threshold in 2016 is $10,800)
- The government will introduce a low income superannuation tax offset (LISTO). From 1 July 2017, eligible individuals with an adjusted taxable income up to $37,000 will receive a LISTO contribution to their super fund. The LISTO contribution will be equal to 15% of their total concessional (pre-tax) super contributions for an income year, capped at $500.
- From 1 July 2017, most people under 75 years old (including those aged 65 to 74 who meet the work test) can claim a deduction for personal after-tax super contributions where they meet certain conditions.
- From 1 July 2017, the annual non-concessional contribution cap will be reduced from $180,000 to $100,000 per year.