Authored by Nick Maharaj, Accountant at Doctors Wealth

Income tax rates

Individual income tax rates for the 2017-18 year will remain unchanged, as per the table below:

Taxable income

Tax on this income*

Up to $18,200

Nil

$18,201 to $37,000

Tax is 19% of the part over $18,200

$37,000 to $80,000

$3,572 + 32.5% of the part over $37,000

$80,000 to $180,000

$17547 + 37% of the part over $80,000

$180,000 and over

$54,547 + 47% of the part over $180,000

*excludes the current Medicare levy of 2%.

Cessation of the Temporary Budget Repair levy

The Temporary Budget Repair levy of 2% of taxable income in excess of $180,000 will expire on 30 June 2017.

The government has made no further announcement to have this levy carried forward. Therefore, the top marginal income tax rate for the 2017-18 year will reduce from 47% to 45%.

Medicare Levy Increase

The Medicare levy will increase from 2% to 2.5% from 1 July 2019.

However, the Medicare levy rate will remain at 2% for the 2017-18 year.

Extension of the $20,000 immediate assets write-off for small businesses

So long as you satisfy the eligibility criteria, you will be able to immediately deduct the purchase of eligible assets costing less than $20,000 where they are first used or installed ready for use by 30 June 2018 e.g. medical or computer equipment

In addition, for assets costing $20,000 or greater, small business entities (SBE’s) can accelerate their depreciation tax benefits by electing to use a tax method enabling depreciation of the asset by 15% in the first year and 30% each year thereafter.

 Restrictions on deductions for residential property investments

From 1 July 2017, depreciation deductions for residential ‘plant and equipment’ (e.g. dishwashers and ceiling fans) will be limited to investors who actually incur the outlay – not subsequent owners.

Also from that date, investors will be unable to deduct travel expenses related to inspecting, maintaining or collecting rent for a residential rental property.

Superannuation Contribution caps cut (from 2016 budget, but only commences this year)

The concessional contributions cap will be reduced to $25,000 from 1 July 2017, and a lifetime non-concessional contributions cap of $500,000 will apply from 7:30pm on 3 May 2016 for all individuals under age 75:

Concessional cap

Current

Proposed

Under age 49

$30,000 pa

$25,000 pa

from 1 July 2017

Age 49 or over

$35,000 pa

Non-concessional cap

Under age 65 at 1 July $180,000 pa or $540,000

over 3 years

$500,000 lifetime cap from

7:30 pm on 3 May 2016

Age 65 or over at 1 July

$180,000 pa

Tax deduction for super contributions – more available (from 2016 budget, but only commences this year)

You will be able to claim a tax deduction for personal superannuation contributions up to the $25,000 cap from 1st July 2017, regardless of your employment circumstances.

Medicare Benefits Schedule (MBS) freeze reversed

The indexation freeze on Medicare rebates, introduced in 2015, will be reversed, including:

  • Bulk-billing incentives for GPs will be indexed from 1 July 2017,
  • Standard consultations by GPs and Specialist attendances will be indexed from 1 July 2018, and
  • Specialist procedures will be indexed from 1 July 2019.

As with any changes to the legislation, there will always be strategies to make the most of the changes, and even emerge in a better financial position than before.

Please contact us on Tel: (07) 3252 8810 or email: info@doctorswealth.com.au if you would like to explore how the changes may affect you.