Key taxation changes for 2017/18 and beyond

A number of taxation changes took effect from 1 July 2017 and onward. Read on to see how you may be affected.

Extension of accelerated depreciation rules

Effective date: 1 July 2017

Small businesses have been granted a 12-month extension in claiming an immediate tax deduction for assets up to $20,000 purchased for use within the business. An immediate deduction may be claimed if the asset was purchased between 7:30 pm on 12 May 2015 and 30 June 2018.

This arrangement was due to finish on 30 June 2017 with the cost threshold for immediate deductions reverting back to $1,000 on 1 July 2017. The deduction can be claimed for each asset with a purchase price of less than $20,000, whether new or second-hand.

Foreign resident capital gains withholding payment

Effective date: 1 July 2017

When a foreign resident disposes of certain taxable Australian property, the purchaser is required to withhold an amount from the purchase price and pay that amount to the ATO. The changes to withholding tax payment (for disposals that occur after the date of commencement) include:

  • an increase in withholding tax rate to 12.5% of purchase price (previously 10%), and
  • a reduction in the threshold above which withholding applies, to $750,000 (previously $2 million).

These amendments apply to acquisitions of property that occur on or after 1 July 2017.

DASP changes

Effective date: 1 July 2017

A new Departing Australia Superannuation Payment (DASP) tax rate of 65% (previously 38%) will apply to working holidaymakers who arrived on certain visa classes (417 and 462). The new tax rate will only apply to both the taxed and untaxed components of the superannuation benefits being paid, where the DASP application is processed on or after 1 July 2017. Tax-free components will be paid tax-free. This increased tax rate does not apply to temporary residents or working holidaymakers who arrived on other visa classes, or where the DASP application was processed before 1 July 2017.

Tax changes for certain working holiday makers

Effective date: 1 January 2017

Since 1 January 2017, working holidaymakers have paid 19% tax on taxable income up to $37,000. Income above $37,000 is subject to the ordinary marginal income tax rates. The 2017/18 income year will be the first full financial year in which the increased tax rate will apply. Working holiday makers include individuals who hold a Subclass 417 (Working Holiday) visa, a Subclass 462 (Work and Holiday) visa or certain bridging visas.

Increase in Medicare Levy income thresholds

Effective date: 1 July 2016

The Medicare Levy income thresholds for the 2016/17 income year have been indexed. These income thresholds determine the point at which an individual is liable to pay the Medicare Levy.