What’s changing on 1 July 2018?
Individuals
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* providing a tax offset for those with taxable income of up to $125,333.
GST on property developments and residential subdivisions – The way GST is collected on sales of newly constructed residential properties or new subdivisions will change from 1 July. Purchasers will be 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 Business also).
Business
Single touch payroll – Employers with 20 or more employees at 1 April 2018 must use standard business reporting-enabled software from 1 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 fewer employees from 1 July 2019.
The $20k instant asset write-off for small business has been extended until 30 June 2019.
GST on low-value goods – GST will apply to overseas sales of goods supplied to Australian consumers with a value under $1,000.
GST on property developments and residential subdivisions – The way GST is collected on sales of newly constructed residential properties or new subdivisions will change from 1 July. 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 the R&D tax incentive is managed will change with caps introduced on cash rebates and for large companies, a refocussing of R&D to 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. This 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.
