Tax Rates

^ Income for surcharge purposes includes, among other things, taxable income, reportable fringe benefits amounts, reportable superannuation contributions and net investment losses. # The family income thresholds are increased by $1,500 for each dependant child after the first child.

* Rebate percentages are adjusted annually on 1 April. ^ Income for surcharge purposes is measured for the financial year ending 30 June, and includes, among other things, taxable income, reportable fringe benefits amounts, reportable superannuation contributions and net investment losses. # The family income thresholds are increased by $1,500 for each dependant child after the first child.

• Base rate* entities - 27.5%
• All other companies - 30%

* A base rate entity for the 2018-19 income year is one which carries on a business and has aggregated turnover of less than $50 million. Note that there is a current proposal before Parliament to modify the definition of base rate entity by removing the carrying on a business test and replacing it with a no more than 80 per cent 'base rate entity passive income' test.

* Applies to individuals whose combined income for surcharge purposes (excluding reportable superannuation contributions) and concessionally taxed superannuation contributions exceed $250,000 for the income year.

** Amounts contributed in excess of the applicable cap may be subject to additional tax or included in the individual’s assessable income and taxed at their marginal tax rate. Individuals can choose to have up to 85 per cent of their excess concessional contributions for a financial year released from superannuation. Additionally, individuals can choose to withdraw excess non-concessional contributions plus associated earnings from superannuation.

^ The non-concessional contribution cap is nil if a member's total superannuation balance (TSB) is greater than or equal to the general transfer balance cap ($1.6 million for 2018-19) at 30 June in the previous financial year. Individuals under 65 years of age can make non-concessional contributions of up to $300,000 over a three-year period (known as the 'bringing forward rule'). Due to the reduction in the non-concessional contributions cap from $180,000 to $100,000 with effect from 1 July 2017, some individuals may have a different cap if the bringing forward rule was triggered in the 2016-17 income year.

Superannuation guarantee charge (SGC)

SGC is payable by employers if during 2018-19 they fail, in relation to each employee, to contribute 9.5% of the employee's ordinary time earnings (base capped at $54,030 per quarter).

* The Government has announced that, from 1 January 2018 the CGT discount will be increased to 60% for resident individuals investing in affordable housing. The affordable housing must be managed through a registered community housing provider and held for a minimum period of three years. As at 1 July 2018, this measure was not enacted.

The rate of depreciation of a depreciating asset (plant) generally depends upon the date of acquisition, whether the taxpayer is a small business entity and the asset's effective life (self-assessed or as determined by the Commissioner).

* Diminishing value rates specified are applicable generally to assets first held on or after 10 May 2006.

Eligible small businesses - those that carry on business and have aggregated turnover of less than $10 million (for the 2018-19 income year) - can choose to apply simplified capital allowances rules, including pooling of depreciating assets and an immediate deduction for a depreciating asset that has a cost that does not exceed $20,000 for assets first acquired on or after 7.30pm, by legal time in the Australian Capital Territory, on 12 May 2015, and first used or installed ready for use before 30 June 2019 (under proposed law yet to be enacted to extend the period beyond 30 June 2018).

The construction cost of income producing buildings and structural improvements may be written off at the following rates where construction commenced on or after 27 February 1992^{^}.

^ Where construction commenced prior to 27 February 1992, qualifying buildings may be written off at either 2.5% or 4% pa, depending on the date on which construction commenced.

• Motor vehicle depreciation cost limit for 2018-19 – $57,581

Under the Research and Development (R&D) tax incentive, entities may be eligible for a tax offset for expenditure on eligible R&D activities and for the decline in value of depreciating assets used for eligible R&D activities.

• Refundable R&D tax offset - Generally only available to eligible entities with an aggregated turnover of less than $20 million.
• Non-refundable R&D tax offset

A $150 million cap (yet to be enacted) on the amount of R&D expenditure that companies can claim as a tax offset at the concessional rates applies. For expenditure over the cap, companies are able to claim a tax offset at the company tax rate. For income years commencing from 1 July 2018, the Government proposes to change the current R&D regime and replace it with new R&D tax offset amounts that, when enacted, will be as follows:

• Refundable R&D Tax offset - The claimant's tax rate for the year plus 13.5 percentage points (capped at $4 million per annum, except for R&D on clinical trials).
• Non-refundable R&D Tax offset - The claimant's tax rate for the year, plus:
  1. 4 percentage points for R&D expenditure between 0% and 2% R&D intensity (inclusive) (i.e. R&D expenditure as a percentage of the claimant's total expenses for the year);
  2. 6.5 percentage points for R&D expenditure above 2% to 5% R&D intensity;
  3. 9 percentage points for R&D expenditure above 5% to 10% R&D intensity; and
  4. 12.5 percentage points for R&D expenditure above 10% R&D intensity.

• FBT rate for year ending 31 March 2019 – 47%

* For contracts entered into from 7.30pm AEST 10 May 2011. Different rates may apply for contracts entered into before this date.

PRRT applies to all onshore and offshore petroleum projects (except those in the Joint Petroleum Development area in the Timor Sea).

• PRRT rate – 40%

1. The above thresholds may be reduced where the company is part of a group and/or pays interstate wages.
2. The lower 2.425% rate applies to business where at least 85% of their Victorian payroll goes to regional employees.
3. This threshold reduces by $1 for every $4 of Australian wages over $1.1 million. Businesses with annual taxable wages of $5.5 million or more will be subject to payroll tax of 4.75% on their entire taxable wages.
4. A reduced rate of 4% applies for taxable wages between $1.25 million and $2 million per annum. An exemption applies for certain wages paid by an interstate business that has relocated to regional Tasmania.
5. A small business rate of 2.5% applies to firms with payrolls between $600,000 and $1 million, then phases up to the general rate of 4.95% for payrolls above $1.5 million. From 1 January 2019, it is proposed that those with wages between $1.5 million and $1.7 million will benefit from a reduced payroll tax rate.
6. From 1 January 2019, it is proposed that businesses with annual taxable wages of up to $1.5 million will be exempt from payroll tax.
7. From 1 July 2018, a tiered payroll tax rate scale applies. For employers paying annual taxable wages of $100 million or less – the general rate of 5.5% applies. For taxable wages of between $100 million and $1.5 billion – a marginal rate of 6% applies, and for employers paying taxable wages of $1.5 billion or more – a marginal rate of 6.5% applies.
8. This threshold reduces gradually for employers with annual taxable wages between $850,000 and $7.5 million. Businesses with annual taxable wages of $7.5 million or more will be subject to payroll tax at 5.5% on their entire taxable wages.
9. This threshold reduces by $1 for every $4 of wages over $1.5 million. Businesses with annual taxable wages of $7.5 million or more will be subject to payroll tax of 5.5% on their entire taxable wages.

The facts and figures outlined in this tax summary are current as at 1 July 2018.

* An information exchange country is a country with which Australia has an effective exchange of information agreement and is prescribed by Regulation 34 of the Taxation Administration Regulations 2017.

^ The Government has announced new measures to encourage investment in affordable housing by MITs. The new arrangements, to apply from income years starting on or after 1 July 2017, may result in a 30% rate applying to certain fund payments made to a resident in an information exchange country where certain conditions are not met. As at 1 July 2018, these measures were not enacted.