Below is a list of changes that are to come into effect from 1 July 2016. These changes were highlighted in the 2015 budget, further changes may come into effect following the upcoming budget on May 10 2016:
- Family Tax Benefit (FTB) Part A large family supplement will be removed from 1 July 2016. However the per child rate of FTB Part A for each eligible child in their family will continue. Additionally any recipients of FTB Part A who are outside Australia will be reduced.
- From 1 July 2016, most working holiday makers to Australia will be considered non-residents for tax purposes, regardless of the length of time of their working holiday. This means they will be subject to non-resident tax rates from their first dollar of income and there will be no tax free threshold available to them. Although recently the Turnbull Government has announced they will be reviewing this policy as a result in a significant decrease in the number of working holiday makers since this policy was announced. UPDATE: The budget did not announce any changes to this policy. The “backpacker tax” will remain i.e. working holiday makers are considered as non=residents and will be taxed on their first dollar of income.
- From 2016-17, Higher Education Loan Program (HELP) debtors residing overseas for six months or more will be required to make repayments of their debt by disclosing their worldwide income. The HELP repayment will be subject to the same minimum repayment threshold which applies to debtors in Australia (currently $53,000). Overseas HELP debtors will be required to disclose their overseas income through lodgement of their non-resident Australian tax return.
- From 1 July 2016 small businesses looking to change the structure of their business will have capital gains tax (CGT) relief. Currently there is only CGT relief available where a change in structure results in an individual, partnership or trust changing to a company structure. The changes should allow changing structures to something other than a company (for e.g. Individual to a trust). In addition to this, stamp duty in NSW will be abolished at the same time on the transfer and sale of business assets (excluding land). If you are stuck in the wrong structure, you should be able to change your structure relatively easily after 1 July 2016.
- The Bill relating to the National Innovation and Science Agenda was introduced on 16 March 2015. If passed, there will be incentives provided to investors in Early Stage Innovation Companies (ESIC’s) which will commence on 1 July 2016. Investors in ESIC’s will be eligible for a 20% non refundable tax offset on the amount invested in ESCI’s (tax offset limited to $200,000 for sophisticated investors and $10,000 p.a for non sophisticated investors), the tax offset has no restrictions on investor residency and applies to a broad range of investor vehicles (for eg. Any investment by a trust or partnership will flow through to beneficiaries and partners). For investors who hold their shares for more than 12 months, but less than 10 years and capital gains will be disregarded (i.e. CGT free). For investors who hold there shares for more than 10 years, they will have a cost base equal to the market value of the shares at the 10 year anniversary. Under this scheme any capital losses are disregarded. Startups which these rules apply to must be less than 3 years old with expenditure less than $1 million and assessable income of less than $200,000.
- From 1 July 2016, Primary Producers will be allowed to write-off any new capital expenditure on water facilities and fencing. Capital expenditure on fodder storage facilities can be depreciated over 3 years.
- All businesses who pay super for their employees need to be SuperStream compliant by 30 June 2016.
If you would like any further information about the upcoming changes and how they may affect you and whether there are any opportunities you can take advantage of please contact one of our North Sydney accountants.