In what is clearly a pre-election budget, the 2016-17 Federal Budget includes significant changes in the areas of:
- Tax concessions for small and medium businesses
- The taxation of multinational groups
- Superannuation
Obviously, implementation of many of these measures is contingent on the result of the next election.
Interestingly the greatest revenue is being raised by the changes to the Tobacco Excise ($4.707bn) followed by the new Tax Avoidance Taskforce being established within the Australian Taxation Office ($3.060bn). The superannuation changes are forecast to raise some $2.884bn in additional revenue.
This revenue is funding tax cuts for individuals ($3.950bn) and businesses ($2.650bn), although the benefit of the reduction in the company tax rate is being phased in over 10 years.
There were no changes to negative gearing or the CGT discount concession.
Small to Medium Businesses
Small to medium businesses will benefit from a reduction in the company tax rate to 27.5%, discounts to the tax payable on profits from unincorporated businesses and a greater range of tax concessions for businesses with a turnover of between $2 million to $10 million.
Individuals
Many individuals will receive a tax cut from 1 July 2016
with the 32.5% marginal tax rate being increased from a threshold of $80,000 to
$87,000. Individuals will also be impacted by the proposed changes to
superannuation.
Corporate & International Businesses
For corporate and international businesses the big changes
relate to further avoidance measures aimed at countering profit shifting.
In time these businesses will benefit from the company tax rate reduction.
Other Measures
Of the other changes announced in the budget, the biggest
revenue raiser is the increase in the tobacco excise.
Superannuation
Major changes are proposed for superannuation, including the
introduction of a $500,000 lifetime limit on non-concessional (after tax)
contributions, a $1.6 million limit on the amount an individual can transfer to
a tax-free pension phase, and a $25,000 annual cap on concessional (tax
deductible) contributions.
