April 2017 Newsletter

APRIL 2017 NEWSLETTER

Company Tax Rate

The Government has finally managed to get the company tax cuts passed through the senate. For the 2016/17 year, the corporate tax rate will be reduced to 27.5% for entities that carry on a business with an aggregated turnover of less than $10M. For the 2017/18 year, this reduced rate of 27.5% will apply to entities with turnover of less than $25M.

Superannuation Contribution Reminder

As the new superannuation rules apply from 1 July, this will be the last chance for those who are eligible to make a non-concessional contribution of $540,000. To be eligible, you need to be under 65 and not have triggered the “bring forward” rule in the last 2 years.

After 1 July, only those who have a superannuation balance of under $1.6 million will be allowed to make non-concessional contributions. In addition, the limit will be reduced from $180K per year to $100K per year (or $300k using the “bring forward” rule). Those over 65 will still need to meet the work test to make contributions.

Employee v Contractor

This is an important area that continues to attract attention of the ATO and OSR. All businesses need to assess their contractor relationships for the purposes of income tax, superannuation guarantee and payroll tax obligations. In determining whether a person is an employee or a contractor, the circumstances and key indicators need to be looked at. Some of the tests are the degree of control the employer can exercise over the employee or contractor, whether the worker can delegate the work, the basis or payment (that is, are they paid for their time worked or for a result achieved), whether the worker takes commercial risks, whether the worker brings to the job all or most things (e.g. equipment) required for the job, and whether the worker is operating independently of your business.

Land Tax and Stamp Duty Surcharges for Foreign Persons

The Government has introduced a land tax surcharge on “foreign persons” who own residential land in NSW, an extra 0.75%. It has also introduced a stamp duty surcharge on purchases of residential land in NSW by foreign persons, an extra 4%. The “foreign person” definition has cast a wide net and may catch certain trusts and companies. If your family trust has a pool of beneficiaries that includes a foreign person, then the trust may be liable to pay this stamp duty surcharge or the land tax surcharge. A foreign person is not an Australian citizen nor a non-Australian citizen who is ordinarily resident in Australia. The issue is when a potential beneficiary moves or lives overseas for part of their lives. The trust deed may need to be reviewed and amended accordingly.

Foreign Resident CGT Withholding

From 1 July 2016, where a foreign resident vendor sells an Australian property with a market value of $2m or more, the purchaser will have to make a foreign resident CGT withholding of 10% from the sales price. To avoid this withholding, the vendor needs a clearance certificate from the ATO.

If you require any assistance with the above issues, please do not hesitate to contact our office.

Disclaimer - The material contained in this newsletter does not constitute advice. DPL is not responsible for any action taken in reliance on any information contained in this newsletter. Anyone reading the newsletter should not act upon material contained in this newsletter without appropriate consultation