2017 Tax Planning Checklist: Introduction

This guide sets out various items to consider prior to 30 June 2017, for effective tax planning.
 

Taxing of Trade Income

There are two forms of taxing trading income depending on whether the business is assessed on a “cash” or “accruals” basis:
  • “Cash” basis businesses are assessed when payment is received.
  • “Accruals” basis businesses are assessed when a legally recoverable debt arises, usually at the point of invoicing.

Record Keeping

Records are required to be retained for tax purposes for between two and five years, depending on the class of taxpayer. 

For taxpayers lodging tax returns under the “Small Business Entity Rules”, the retention period for records is two years.

However, records must to be retained for the term of ownership for an asset subject to capital gains tax.  The Australian Taxation Office ATO) does allow taxpayers to utilise an asset register to record capital gains tax transactions. The entries in the asset register must be certified by a registered tax agent. The supporting records do not then have to be maintained for the period of the investment.
It is noted that source records should also generally be retained to substantiate the existence of tax losses, meaning that records should be available to support tax losses incurred more than 5 years ago.  

Individual Income Tax Rates

The following table outlines the individual income tax rates for 2016/17:
 
Taxable Income ($)
Tax Rate (%)
0 - $18,200 Nil
$18,201 - $37,000 19c for each $1 over $18,200
$37,001 - $87,000 $3,572 plus 33c for each $1 over $37,000
$87,001 - $180,000 $19822 plus 37c for each $1 over $87,000
$180,000 and over $54,232 plus 45c for each $1 over $180,000

Temporary Budget Repair Levy

A Temporary Budget Repair Levy continues until 30 June 2017. The levy will apply to individuals with a taxable income exceeding $180,000. The Temporary Budget Repair Levy is 2% of the taxable income over $180,000.

Medicare Levy Surcharge and Private Health Care Rebate

The income thresholds that apply to the 2016/17 financial year are:
 
Details
Full Entitlement
Tier 1
Tier 2
Tier 3
  Taxable Income
Private Health Insurance Rebate
Singles $90,000 or less $90,001 to
$105,000
$105,001 to
$140,000
Over
$140,000
Families $180,000 or less $180,001 to
$210,000
$210,001 to
$280,000
Over
$280,000
Age Rebate for premiums paid, 1 July 2016 - 31 March 2017
Under 65 years 26.791% 17.861% 8.930% 0%
 
Details
Full Entitlement
Tier 1
Tier 2
Tier 3
65 - 69 years 31.2567% 22.326% 13.395% 0%
70 years or over 35.722% 26.791% 17.861% 0%
Age Rebate for premiums paid, 1 April 2017 – 31 March 2018
Aged under 65 years 25.934% 17.289% 8.644% 0%
Aged 65 to 69 30.256% 21.612% 12.966% 0%
Aged 70 or over 34.579% 25.934% 17.289% 0%
Medicare Levy Surcharge        
All ages 0% 1% 1.25% 1.5%
 
For families with children, the thresholds are increased by $1,500 for each child after the first.