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Other Important Changes

Personal Tax Crackdown to raise $1.1B

The Government is providing $130.8M to the ATO over four years to increase compliance activities on personal income tax returns.

Proposed targeted areas are;

  • Over-claiming of work-related expenses and rental losses;

  • Foreign source income;

  • Denying deductions on holding vacant land.

R & D Tax Incentive

The Budget contains a number of changes to the R & D Tax Incentive which tax effect from 1 July 2018.

For companies with turnover below $20M, the R&D offset will be a 13.5% premium above it corporate tax rate. Currently these companies receive a flat 43.5% incentive. Companies with a 27.5% tax rate will have their incentive decreased from 43.5% to 41%.

For most taxpayers, cash refunded from the R&D Tax Incentive will be capped at $4M per year.

Additionally, the Government will be providing additional funding for greater enforcement and an increase in the integrity measures to both the ATO and AusIndustry.

Circular Trust Distributions

From 1 July 2019, anti-avoidance rules will apply for family trusts which undertake circular trust distributions.

Under the proposed laws, these types of arrangements will involve a 45% + Medicare Levy tax rate.

Detail of this change has not been released yet, so it is difficult to see what will be targeted under this arrangement.

Taxable Payments Reporting System to go to further industries

Now, TPRS applies to the construction, cleaning & courier industries.

From 1 July 2019, this will extend to security providers and investigation services, road freight transport and computer system design and related services.

The TPRS requires business to report contractor payments to the ATO, like how business report wages paid to employees to the ATO.

Black (Cash) Economy Crackdown

Additional funding will be provided to the ATO over four years to implement new strategies to crackdown on businesses involved in dealing with cash.

A limit of $10k for cash payments to businesses for goods and services has been proposed to start 1 July 2019. This will require transactions above $10k to be made through electronic payment of cheque.


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