Wondering what the Australian Budget 2018 changes could mean for you?
In this blog, Stellar Accounts Owner and CPA, Debbie Hoffman, explains the biggest potential Game Changers in the 2018 Budget – and how these might just affect you and your business.
2018-19 Tax Threshold Levels
The biggest win from the 2018 Budget for all taxpayers is the change in the income tax thresholds – especially the proposed removal of the 37% tax threshold, meaning those people that earn between $41k and $200k will only pay a maximum of 32.5% income tax.
In the meantime, the Government will start its income tax reforms by increasing the 32.5% upper income tax bracket from $87k to $90k – meaning those earning between $87k and $90k will only pay a top income tax of 32.5% starting from the 2018-19 financial year.
2018 Budget Changes
1. Low and middle income offset
One of the most widely talked about budget announcements was the tax offset for low and middle income earners.
A non-refundable tax offset of up to $530 per annum targeted at low income earners, is proposed for those with a taxable income of up to $125,333.
Look out for 2018-19 and 2021-22 tax years – when this change will apply.
The amount you will receive depends on income. More specifically:
- For taxpayers with an income of $37,000 or less, the offset will provide a benefit of up to $200.
- For taxpayers with an income of $37,000 and $48,000 – the value of the offset will increase by 3 cents in the dollar up to the maximum offset of $530.
- Taxpayers with an income between $90,001 and $125,333, the offset will phase out at a rate of 1.5 cents per dollar.
2. Removing Tax Deductibility of Non-Compliant Payments
A tax deduction would not be allowed for the following where PAYG is not withheld:
* Wages – payments made by businesses to contractors where the contractor does not provide an ABN
This will affect businesses from 1 July 2019.
PAYG reporting and tax withholding requirements provide integrity to the tax system.
3. Cash Payment Limit
The government will introduce a limit of $10,000 for cash payments made to businesses for goods and services.
Currently, large undocumented cash payments can be used to avoid tax or to launder money from criminal activity.
This measure will require transactions over a threshold to be made through an electronic payment system or cheque.
It is proposed that the said measure would apply from 1 July 2019, and understood to affect businesses in general.
2018 Budget Changes
If you require further clarification on the 2018 Budget implications – or just need help getting your financial and tax records in order, call Stellar Accounts on 07 3350 6762, or submit an online enquiry here.
Stellar Accounts is Brisbane’s leading small and new business accounting firm. We have a reputation for simplifying your accounting, tax and bookkeeping needs so you don’t need to stress or worry.
With more than 20 years’ experience across a wide array of industries – our clients (typically small and medium sized businesses) – gain a distinct advantage over their competitors because we keep them in the loop of the latest information and regulatory requirements. Call us on 07 3350 6762.
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