Federal Budget Update 2016-17 – May 2016

Federal Budget Update 2016-17 – May 2016

To our Valued Clients

Welcome to the KSR edition of the Federal Budget overview.

Please click here for a more detailed overview of the budget measures and how it impacts on you. Please do not hesitate to contact the team here at KSR if you have any questions.

The Federal Government handed down its pre-election budget last night and in contrast to recent budgets, this budget seems to have delivered on the government’s promise to promote jobs and growth in a transitioning economy, with an emphasis on small business. Scott Morrison has promised to fix the problems in the tax system by combating tax avoidance by multinational companies. A range of measures have been announced to make superannuation a more equitable bona fide retirement vehicle.

The main message from this year’s budget is the introduction of the ten year enterprise tax plan and superannuation reforms.

The key changes announced are:

• Eligibility turnover threshold for small business concessions increased from $2M to $10M

• Corporate tax rate for small business decreases to 27.5 per cent from 1 July 2016

• 32.5 per cent individual tax threshold increased from $80,000 to $87,000

• Temporary budget repair levy of 2 per cent applying to individuals earning over $180,000 will cease on 30 June 2017 as intended

• Limit of superannuation pension balances to $1.6M

• Tax exemption on earnings from transition to retirement pensions removed• Lifetime non-concessional contribution limit of $500,000

• The income threshold above which the additional 15% contributions tax kicks in will be reduced from $300,000 to $250,000 from 1 July 2017

The Team at KSR