Share     Facebook icon Twitter icon Twitter icon


The Federal Government 2018/19 Budget was handed down in Canberra on Tuesday night 8th May. We view the Budget this year as relatively benign with only a few items to be aware of.

Below is a brief description of the key points. If you would like any information on these points or any other item you might have seen in the media, please do not hesitate to contact us.

(1)    Small Business Instant Asset Write Off

The ability of a small business to write off the purchase of assets costing less than $20,000 has been extended for another year until 30 June 2019.

(2)    Changes in Tax Rates

There are lower tax rates commencing from 1 July 2018 for anyone earning less than $90,000. More substantive tax reductions are proposed in stages over the next seven (7) years

(3)    A new Tax Offset

There is a new Low and Middle Income Earners Tax Offset being introduced. It is in addition to changes in tax rates. The offset phases out for anyone with an income greater than $90,000. The maximum offset available is $530.

(4)    Claiming Superannuation Deductions

In the Budget in May 2017, the Government made it easier for taxpayers to claim a deduction for their own superannuation contributions. The Government this year intends to improve the integrity of the process for claiming the deductions.

It is crucial that a “Notice of Intent to Claim a Deduction” form is prepared and sent to the Super Fund by key dates (the lodgement of your return). If the appropriate form is not sent and reply from the Fund received, no tax deduction will be allowed

(5)     Inadvertent Super contribution breaches

From 1 July 2018, the Government will allow individuals whose income exceeds $263,157, and who have multiple employers, to nominate that their wages from certain employers are not subject to the superannuation guarantee (SG).

The measure will allow eligible individuals to avoid unintentionally breaching the $25,000 annual concessional contributions cap as a result of multiple compulsory SG contributions. Employees who use this measure could negotiate to receive additional income, which is taxed at marginal tax rates.

(6)     Claiming Super Deductions

From 1 July 2019, businesses will no longer be able to claim a deduction for the following payments:

  • Payments to their employees such as wages where they have not withheld any amount of PAYG from these payments (i.e., despite the fact the PAYG withholding requirements apply).

  • Payments made by businesses to contractors where the contractor does not provide an ABN and the business does not withhold any amount of PAYG (despite the withholding requirements applying).

(7)     Other Super changes

In other super changes;

  • It is proposed that the maximum number of members of a SMSF be expanded from four (4) to six (6)

  • There is a proposal to allow a one year exemption from the work test for older Australians who have less than $300,000 in total superannuation savings.

  • A proposal that for younger members of a super fund or if a member has less than $6000 in superannuation that there be a cap on the fees that can be paid and that Insurance become optional.

(8)    Distributions to companies from discretionary trusts

From 1 July 2019, where a Discretionary trust makes a distribution to a company, the money must flow to that company. IF the funds do not flow to the beneficiary, an unpaid present entitlement (‘UPEs’) is created. This measure will ensure the UPE is either required to be repaid to the private company over time as a complying loan under S.109N of the ITAA 1936 or is subject to tax as a dividend.

(9)    New Company Director Liabilities

The types of liabilities that Directors of companies are personally liable for has been expanded. The largest potential exposure is GST

We will be sending another Newsletter in about 3 weeks. This note, will provide some tips as we come into the end of the financial year (30 June 2018) and outline some more significant announcements that are legislated to start in July 2019 that will affect all employers.


Bongiorno (NSW) Group