Tax Rates 2017-2018 Year (Residents)
The 2018 financial year starts on 1 July 2017 and ends on 30 June 2018. The financial year for tax purposes for individuals starts on 1st July and ends on 30 June of the following year.
The 2017 Budget made no changes to the personal income tax scale for residents. However, the temporary budget levy of 2% on higher income earners ($180,000+) ends on 30 June 2017 according to its original 3-year time frame.
Tax scale 2017-18
|Taxable Income||Tax On This Income|
|0 to $18,200||Nil|
|$18,201 to $37,000||19c for each $1 over $18,200|
|$37,001 to $87,000||$3,572 plus 32.5c for each $1 over $37,000|
|$87,001 to $180,000||$19,822 plus 37c for each $1 over $87,000|
|$180,001 and over||$54,232 plus 45c for each $1 over $180,000|
Temporary Budget Repair Levy ends
Legislation passed in 2014 applied the Temporary Budget Repair Levy of 2% to taxable incomes in excess of $180,000 for a period of 3 years from 1 July 2014 until 30 June 2017. The tax rates tables above therefore reflect the removal of the levy with effect from 1 July 2017, and the return of the top marginal rate to 45%.
With this change, most tax deduction employment schedules have been updated to apply from 1 July 2017. See updated PAYG 2017-18 tax schedules here.
The above tables do not include Medicare Levy or the effect of any Low Income Tax Offset (“LITO”). Medicare Levy is applied on a progressive basis if eligible private health insurance cover is not maintained. There are low income and other full or partial Medicare exemptions available. A Medicare Levy Surcharge may also be applicable.
What’s new in 2017-18?
As noted above, the higher income ($180,000 and above) 2% levy ceased on 30 June 2017. Here’s a list of some other significant tax changes applying in the 2017-18 financial year:
Government super contribution for lower income earners: Under legislation passed in September 2014 the Low Income Superannuation Contribution (“LISC”) benefit ceases on 30 June 2017. Determination of eligible LISC claims will cease on 30 June 2019. However the Budget 2016 contained a similar new measure to commence on 1 July 2017 for which legislation has now been passed – see: Low Income Superannuation Tax Offset (“LISTO”)
Spouse super tax offset: The full rebate spouse income threshold has been increased from $10,800 to $37,000 to apply from 1 July 2017, with a shading out on incomes between $37,000 and $40,000. The maximum rebate (calculated at the rate of 18% of maximum rebatable contributions) remains at $540. See – Spouse Super Contributions Tax Offset
Superannuation Caps and Pensions Rules – From 1 July 2017
Modified super contribution cap and retirement rules introduced, starting from 1 July 2017. The changes include:
- The annual concessional contributions cap is fixed at $25,000, non-concessional $100,000 subject to $1.6 million limit on total super balance
- changes to the bring-forward rules, including transitional measures
- transfer balance cap: a limit of $1.6 million on the total superannuation which an individual can move to the tax-free retirement phase
- transition to retirement pensions excluded from the tax-free retirement phase tax-free treatment
Superannuation death benefits – ‘anti-detriment‘ deduction removed from 1 July 2017
First home supersaver scheme: Salary sacrifice for first home-owner savers – super contributions made from 1 July 2017 may be withdrawn from 1 July 2018 for a first home deposit. See further: First Home Super Saver Scheme
Home downsizing super contributions for 65 year olds: Downsizing contribution scheme for those aged 65 years and over introduced as part of the First home supersaver scheme legislation applies to home sale contracts exchanged from 1 July 2018. See Downsizing Home Super Contributions
Residential rental property owners are to be hit with deduction limitations and a foreign owner’s fee under measures proposed in the 2017 Budget:
- Deductions for travel expenses related to a residential rental property not allowed from 1 July 2017
- Depreciation of plant and equipment claims will be restricted to the owner who actually purchased the asset. This will apply prospectively to assets purchased after 7.30pm on 9 May 2017.
- Foreign owners of residential real estate from 9 May 2017 will be hit with an annual vacancy fee where the property is not occupied or genuinely available on the rental market for at least 6 months in 12.
- See more here
Personal super contributions
The requirement that an individual must earn less than 10% of their income from employment to be able to claim a deduction for personal superannuation contributions has been removed from 1 July 2017. See further: Personal Superannuation Contribution Deductions
Higher income earners’ additional tax on super contributions (Div 293 tax): the threshold at which high-income earners pay Division 293 tax on their concessional taxed contribution to superannuation is $250,000 from 1 July 2017 (down from $300,000). See further – Super Contributions Tax
For further information and checklist links to superannuation changes commencing 1 July 2017 – see Superannuation
HECS-HELP repayments by overseas graduates
Repayment obligations commence 1 July 2017 From 1 January 2016, for taxpayers who have moved overseas for more than six months. See more info here.
Working Holiday Maker Visa Holders (“Backpackers”) – Departing Australia
As part of changes introduced in 2017, the Departing Australia Superannuation Tax goes to 65% from 1 July 2017. Non-WHM visa holders remain taxed at 35% or 45%. See more: Departing Australia Superannuation Payment
CGT and real property disposals by foreign residents
From 1 July 2017 the withholding scheme will be modified:
- threshold (contract price) lowered to $750,000 (previously $2 million)
- withholding tax rate increased to 12.5% (previously 10%)
The main residence exemption (subject to passage of legislation) is to be removed for non tax residents from 9 May 2017 with a grandfathered period for existing holdings until 30 June 2019.
See also – CGT and non-residents
- The small business instant asset write-off (up to $20,000) has been extended by 1 year to 30 June 2018. A Budget 2018 proposal will see it extended by a further year to 30 June 2019 (subject to legislation being passed). See small businesses
- company tax rate 27.5% for ‘base rate’ companies – those with aggregated turnover under $25 million (up from $10 million). See company tax rates
- FBT rate is 47% (down from 49%) as from 1 April 2017
- simplified BAS returns implemented from 1 July 2017
- Digital currency (bitcoin) to be treated as money from 1 July 2017 to relieve potential double GST. See also other GST changes.
Affordable Housing Incentives
A Budget 2017 initiative: The MIT investment incentives are to be expanded to allow investment in affordable housing (from 1 July 2017) and individual resident investors will be eligible (from 1 Jan 2018) for a higher capital gains tax discount of 60% (up from the existing 50%). See progress on the introduction of these measures here: Affordable Housing Incentives
Exploration Development Incentives
The government has introduced measures for a revised Junior Minerals Exploration Incentive to operate from 1 July 2017 covering expenditure for the 2017-18 and following years. The scheme has both funding and claim caps. See more details here: Junior Minerals Exploration Incentive
This page was last modified 2018-05-31