It’s fair to say that this year’s budget doesn’t come with many bonuses for many of our Salary and Wage earner clients. For those who earn more than $80,000 a year from 1 July 2016 you will get the benefit of the 32.5% tax rate up to $87,000 a year, a saving of wait for it $315 a year, not a lot but still better in your pocket.
There is also a small increase in the medicare levy thresholds, $21,335(up from $20,896) for individuals & $36,001(up from $35,261) for Families.
The other benefit for low income earners is the Superannuation Tax Offset which will not kick in until 1 July 2017. If you earn under $37,000 and an employer has made contributions into your super, the Government will put back into your superfund up to $500 of tax paid on those contributions.
Also from 1 July 2017 all individuals under the age of 75 will be able to claim deductions for personal contributions into super, currently only available for the self-employed.
If you have a spouse earning less than $37,000 per year and you contribute to their super from 1 July 2017 you will be able to claim a tax offset up to $540 per year on contributions up to $3000 per year.
The big winners in this budget has been all of our Small Business clients, with the Government trying to promote economic growth and employment.
The previously announced 5% tax discount for tax paid on income from business which starts from 1 July 2016, will increase to 8%, up to a maximum discount of $1,000.
The company tax rate will reduce to 27.5% from 1 July 2016 for all small businesses.
A small business will be classified as a business with a turnover up to $10 million per year. Being classified as a small business allows access to the simplified depreciation rules including claiming an immediate deduction for assets costing less than $20,000(up to 30 June 2017).
Overall the budget is a bit ho hum but there is still enough there to keep us on our toes.Chad McKnight – Partner