May 3, 2016
Thomson Reuters Releases Checkpoint Special Report Analysing Australia’s Not-so-Typical 2016 Federal Budget
CANBERRA, AUSTRALIA – Thomson Reuters today released a special overnight report providing accountants, tax advisors, financial planners and businesses with a detailed analysis of Australia’s 2016-17 Federal Budget — dubbed by many as an “election budget” with Prime Minister Malcolm Turnbull expected to call a double dissolution election in the coming days.
In the lead-up to the budget, the government repeatedly emphasised the need for Australia to "live within its means," a theme that Treasurer Scott Morrison reinforced in his budget speech. Morrison said this is "not a typical budget" in terms of sweeteners, but it represented the government's economic plan for Australia.
“With an expected double dissolution election to be held in two months, this budget assumes greater-than-usual importance,” said Terry Hayes, senior editor for Thomson Reuters Checkpoint.
Just hours before the budget was released, the Reserve Bank cut interest rates to an all-time low, a quarter percentage point cut to 1.75%. “This stole some of the limelight from the budget,” Hayes said, “although there were still a few surprises left to unveil.”
In the budget, the government set out plans to address tax avoidance by proposing a UK-style diverted profit tax (DPT) of 40% whilst slashing corporate tax rates for small businesses to 27.5% as of July 2016.
The major revenue measures announced in the budget included:
- Raising the bracket at which the 37% tax rate starts from $80,001 to $87,001, beginning July 1.
- A phased reduction in the company tax rate over 10 years.
- Major tax changes for small and midsize businesses, including an increase in the small business threshold to $10 million and reduced tax rates.
- Significant new measures directed at tax avoidance by multi-national corporations including a diverted profits tax, hybrid mismatch measures, strengthened transfer pricing rules, and a significant increase in administrative penalties.
- Superannuation changes:
- $1.6 million transfer balance cap for retirement accounts.
- Non-concessional contributions: $500,000 lifetime cap.
- Concessional contributions cap cut to $25,000 beginning July 1, 2017.
- Concessional contributions catch-up for account balances less than $500,000.
- Superannuation contributions tax (extra 15%) for incomes above $250,001.
- The government also is to impose a goods and services tax on goods imported by consumers regardless of value. The new rules will commence on July 1, 2017.
The Checkpoint Special Budget Report contains a detailed analysis of the entire budget with an executive summary on the main points including special comments from Reuters News.
Thomson Reuters Checkpoint is the industry leader providing intelligent information to tax and accounting professionals in Australia and worldwide — including expert research, guidance, cutting-edge technology and tools, learning, and news in a variety of formats. Checkpoint is relied on by thousands of professionals around the world to understand complex information, make informed decisions and use knowledge more efficiently.
For more information visit: https://tax.thomsonreuters.com.au/
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