1 JULY marked the beginning of the 2018 tax season!
Have you lodged your 2018 tax return yet?
Before you get started, here are some tax changes you need to know for the 2018 tax season.
Expiration of the temporary budget repair levy
The temporary budget repair levy no longer applies for the 2018 tax season.
Separation of the cost of managing tax affairs
Your 2018 tax return will divide item D10 for the Cost of managing tax affairs into interest charged by the ATO, litigation costs, and other expenses. For more information, click on changes to how you claim the cost of managing tax affairs.
Age limit on the personal superannuation contributions deduction
Regardless of your employment status, individuals under 75 years old can now claim a deduction for personal superannuation contributions at item D12.
The income threshold increases for the Superannuation contributions on behalf of your spouse tax offset
The income threshold for your spouse increases from $10,800 to $37,000.
In the case that your spouse earns less than $37,000, you’re allowed to claim up to the maximum $540 tax offset for superannuation contributions (item T3) you make on behalf of your spouse. Once your spouse exceeds the non-concessional contributions cap or had a total superannuation balance of $1.6 million or more on 30 June 2017, you can no longer claim this tax offset.
The cap on defined benefit income streams
The tax-free income you receive from a “capped defined benefit income stream” such as a pension or annuity will now have an income cap of $100,000.
The ATO disallows travel expenses as a deduction for residential rental properties
You cannot take a deduction for travel expenses in relation to your residential rental property.
For more information on exceptions, take a look at item 21 Rent by the ATO.
Limit on deducting second-hand depreciating assets on residential rental properties
You cannot claim a deduction for the decline in value of specific second-hand depreciating assets (item 21 and Rental properties 2018) which:
• You are contracted to acquire/acquired it, at or after 7.30pm on 9 May 2017
• Had installed ready for use or used, for any private purpose in 2016–17 or earlier
• You were not eligible for a deduction for the decline in value in 2016–17
Reportable fringe benefits amounts are no longer adjusted down
In other words, the government has made changes to fringe benefits under the income tests for the following:
• Net medical expenses tax offset
• Dependant (invalid and invalid carer) tax offset
• Zone and overseas forces tax offset
• Low-income superannuation tax offset
• Rebate income to calculate seniors and pensioners tax offset
The amount at W item IT1 and the amount at label S in the Spouse details section will no longer be adjusted down when the ATO calculates specific tax offsets.
Base rate entities will be subject to the 27.5% corporate tax rate
As a company, you must classify as a “base rate entity” for 2017–18 to receive the lower company tax rate. This means that you must have an aggregated turnover of less than $25 million and are carrying on a business.
Then, to apply for the 27.5% corporate tax rate, you will need to complete the checkbox in the ‘Status of company’ section of the return form. Otherwise, companies who do not meet the following above will continue to be subject to the 30% tax rate.
Lodge with E-Lodge.
Now that you’re aware of the changes for the 2018 tax season, create a 2017-2018 account to enter your tax information. Our customer service representatives are here to help if you have any questions!
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