Facts on Tax

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Personal Superannuation Contribution Deduction has CHANGED in 2018

The government has changed the eligibility rules to allow more people to claim a deduction for personal superannuation contributions. Previously, only those who earned less than 10% of their total income as an employee were eligible to claim this deduction. This 10% rule has been removed which means most Australians under 75 years old can claim an income tax deduction for personal superannuation contributions made into an eligible superannuation fund.

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Changes for Residential Property Deduction from 2017/2018 FY

Travel Deduction:

Travel expenses previously allowed in regard to inspecting, maintaining or collecting rent for a residential property cannot be claimed from the 2017/2018 income tax year

Depreciation deductions for plant and equipment in second hand properties:

For second hand residential rental properties purchased on or after 7:30pm on 9 May 2017, property investors can no longer claim depreciation for previously used plant and equipment. The changes mean that depreciation is not allowed on such assets as floor coverings, air-conditioning and appliances within the property at the time of purchase.

The rules do not change depreciation claims allowed for properties purchased prior to 9 May 2017 unless the property was held earlier but not rented until after 1 July 2017 (for example if the owner used the property as a primary place of residence and decides to rent property out after 1 July 2017).

Any investor who purchases a brand new property can continue to claim depreciation for plant and equipment as normal.

Depreciation of plant and equipment for non-residential/commercial properties is also unaffected.

Importantly the new rules do not apply to capital works so the deduction for structural and fixed items contained within an investment property are still allowed. Depending on the date of construction, capital works deductions of 2.5% or 4% per annum may apply for the construction cost of the property. Therefore it is still important to obtain a quantity surveyor report on purchase of investment properties to determine allowable deductions.

What is Sharing Economy?

The sharing economy connects buyers (users) and sellers (providers) through a facilitator who usually operates an app or a website.

Popular sharing economy services include:

Renting out a room or a whole house or unit for a short-time basis, for example Airbnb and Stayz

Providing 'ride-sourcing' services for a fare (considered to be taxi travel) such as Uber and GoCatch

Providing personal services, including creative or professional services like graphic design, creating websites, or odd jobs like deliveries and furniture assembly, like Airtasker and Mad Paws

Renting out a car parking space, for example Parkhound and Spacer.

Working Holiday Maker Tax Rate Changes

New rules from 1 January 2017:The tax system was changed for working holidaymakers from 1 January 2017.

From that date, if you have the following working holidaymaker visa subclass you will be affected by the new rules:

417 (working holiday) & 462 (work and holiday)

From 1 January 2017, you will be taxed at 15% on the first $37,000 of income which you earn. Thereafter, you will pay tax at ordinary rates. This means you won’t be eligible for the tax-free threshold.

You should be paid super by any employer you work for whilst in Australia. You can then apply for a refund of that super once you leave Australia. This will be paid to you as a Departing Australia Superannuation Payment and will be taxed at 65% (from 1 July 2017).

Resident or non-resident? Although your working holiday maker status means you’ll be taxed at special rates, you’ll also be regarded as non-resident for tax purposes.

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Basic Tax Return

Resident Tax Rate

Tax rate 2017/2018

Taxable Income Tax Rate

0-18,200 Nil

$18,201 -- $37,000 19%

$37,001--$87,000 32.5%

$87,001-- $180,000 37%

$180,001 and over 45%

plus 2% medicare levy

Tax rate 2016/2017

Taxable Income Tax Rate

0-18,200 Nil

$18,201 -- $37,000 19%

$37,001--$87,000 32.5%

$87,001-- $180,000 37%

$180,001 and over 45%

plus 2% medicare levy

2% Temporary Budget Repair levy for incomes over $180,000

Non-Resident Tax Rate

Tax rate 2017/2018

Taxable Income Tax Rate

0-87,000 32.5%

$87,001 -- $180,000 37%

$180,001 and over 45%

Non residents do not pay medicare levy

Tax rate 2016/2017

Taxable Income Tax Rate

0-87,000 32.5%

$87,001 -- $180,000 37%

$180,001 and over 45%

Non residents do not pay medicare levy

Working Holiday Maker Tax Rate

Tax rate 2017/2018

Taxable Income Tax Rate

$0-37,000 15%

$37,001 -- $87,000 32.5%

$87,001 -- $180,000 37%

$180,001 and over 45%

Do not pay medicare levy

Tax rate 2016/2017

Taxable Income Tax Rate

$0-37,000 15%

$37,001 -- $87,000 32.5%

$87,001 -- $180,000 37%

$180,001 and over 45%

Do not pay medicare levy, any income earned prior to 1 January 2017 will be taxed based on residency status ( most working holiday maker are foreign resident for tax purposes