breaking down the bits of the federal budget for real estate businesses
1. Extension of $20k immediate asset write-off deduction for SBE’s [entities with <$10m turnover] to 30 June 2019
2. Long term changes to tax thresholds
- From 2018/19 Top of 32.5% tax threshold moved to $90,000 [from $87,000]
- From 2022/23 Top of 19% tax threshold moved to $41,000 [from $37,000] + Top of 32.5% tax threshold moved to $120,000 [from $90,000]
- From 2024/25 37% tax threshold abolished and increase top tax threshold to $200,000 [from $180,000] … has the effect of increasing 32.5% tax threshold to $200,000 [from $120,000]
3. Medicare levy no longer increasing to 2.5% [remaining at 2%] … Not a saving as such but at least not an increase that was already planned!
4. Deductibility of referral fees more in doubt than ever with payments made to individuals that are not employees [and had no PAYGW deducted from the payment] or contractors that have not provided an ABN. [there will be no doubt some exceptions for legitimate payments but finer detail to be reviewed]
5. More money for the ATO to keep taxpayers honest [and we know real estate agents are clearly on the radar of the ATO given the average deductions claimed are greater than many other industries]
6. New non-refundable low and middle income tax offset [from 2018/19]
- Taxpayers with taxable incomes from $48,000 to $90,000 will be eligible for the maximum benefit of $530.
7. Cash payments > $10,000 now illegal [not that I am suggesting these would happen within the industry]
8. Directors liability extended to now potentially include unpaid GST [just like with unpaid PAYGW and super]
9. Deductions disallowed for holding vacant land unless carrying on a business [which should exclude ‘real’ property developers]
10. Company tax cuts still planned for companies with < $25m turnover in 2017/18 and <$50m turnover in 2018/19 [still proposed to increase further for bigger companies]
11. Opt-out of super guarantee for those with income > $263,157 and have multiple employers [to avoid breaching $25,000 concessional cap]
12. Self-managed Super Funds with good compliance history to only be audited every 3 years instead of annually
There is a lot of finer detail always hidden within the budget documents and post-budget announcements … please do not rely on these highlights from the budget in isolation.
Want to know how any of these changes may apply to you, call one of our real estate specialist teams on 07 3193 3000.