2016-2017 Federal Budget overview

The focus of this year’s budget is growing jobs and supporting small businesses, while targeting superannuation concessions and multinational profit shifting.

Several tax concessions for small businesses, including the $20,000 immediate write-off for equipment purchases, will be extended to businesses with annual turnover between $2m and $10m. Tax cuts will also be provided to both individuals and businesses, with the upper limit of the 32.5% tax bracket increasing to $87,000, the company tax rate for small businesses being reduced to 27.5% from 1 July 2016 and the company tax rate for all companies gradually being cut to 25% by 2026.

There have also been changes limiting the tax concessions enjoyed by superannuation funds, including the introduction of a $1.6m transfer balance cap on amounts moving into retirement phase, reduction of the concessional contributions cap to $25,000, introduction of a lifetime cap of $500,000 for non-concessional contributions and reducing the Division 293 threshold to $250,000.

Building on the Multinational Anti-Avoidance Law announced in last year’s budget, the government is also stepping up its efforts to make multinationals pay their fair share of tax. A new Diverted Profits Tax will be introduced to impose tax of 40% on income that large multinational businesses attempt to shift offshore.
The government’s $840m youth employment package is aimed at boosting the participation of young people in the workforce through industry-endorsed skills training, internship placements and wage subsidies for employers.

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