As we welcome the new financial year, we are left asking what changes to legislation may affect us or our businesses. The changes from the 1 July 2017 include:
- GST applies to digital products & services imported by consumers, such as Netflix.
- Small business $20k instant asset write-off extended until 30 June 2018.
- Company tax rate reduction to 27.5% for entities with an aggregated turnover of less than $25m (companies with a turnover of less than $10m have been subject to this tax rate since 1 July 2016).
- Major Bank Levy introduced.
- 2% temporary debt tax removed from high income earners.
- Plant and equipment deductions limited for residential property investors (not yet legislated).
- Residential property investors are no longer able to claim travel expenses to their investment properties (not yet legislated).
- The First home saver scheme begins (not yet legislated).
Clients with SMSF’s need to be aware of the new superannuation reforms that have also come into effect including:
- The concessional contributions cap (before tax) reduces to $25,000.
- The non-concessional contributions cap (after tax) has been reduced to $100,000.
- $1.6 million transfer balance cap is the limit on the amount of money that a member can transfer into or hold in a tax-free pension account. Excess amounts are subject to a transfer balance tax.
- Threshold to access the tax offset for contributions to a spouse increased to $37,000 (partial offset available up to $40,000).
- Threshold for low income super tax offset increased to $37,000.
- The threshold at which high-income earners pay Division 293 tax on their concessional taxed superannuation contributions reduced to $250,000 (from 300,000).
The new rules relating to GST on imports under $1,000
Previously the rules stated that imports below $1,000 were excluded from GST, however parliament passed legislation last month which means that all imports no matter the value will now be subject to GST.
The treatment of internet shopping has been an argumentative issue for a while with the retail sector lobbying hard to ensure that where a business is benefiting from sales to Australian consumers, the purchase is taxed in the same way as local retailers.
While the start date of the change will not come into effect until 1 July 2018, businesses that are importing goods into Australia will need to review their position to check whether supply chains are affected and determine which entity is actually liable for the GST. Australian businesses that purchase low value goods from overseas should also check to ensure that overseas suppliers are not imposing GST on supplies of these goods unnecessarily in this financial year.
The new rules are intended to apply to circumstances that are not captured by the existing GST importation rules because the goods are worth $1,000 or less. The rules are intended to only apply when goods are delivered to Australian consumers who are either not registered for GST in Australia or where the goods do not relate to an enterprise or business being carried on in Australia. If your business imports goods into Australia and is registered for GST, the tax should not apply to low value goods you import.
Where goods are purchased through electronic providers, such as Amazon, eBay or Alibaba, responsibility for collecting the GST will rest with the electronic provider as they manage the customer billing on behalf of the supplier. However, the Government understands that it will be difficult to force foreign companies to comply with the new rules leading to concerns about the costs of the administration required to enforce GST on low value goods.
For overseas suppliers, if the value of goods sold into Australia is greater than $75,000 per annum, the entity is required to register for GST. However simplified options are available for those that only export to Australia and have no need to claim tax credits in Australia.