Capital gains tax changes for foreign investors
In the 2017 budget, the government announced that the foreign resident capital gains tax (CGT) regime will be extended to deny foreign and temporary tax residents access to the CGT main residence exemption.
Subsequent to the 2017 budget announcement, the proposed change was modified so that temporary tax residents who are Australian residents will not be affected by the change.
For properties held by foreign residents prior to 9 May 2017, the main residence exemption can be accessed until 30 June 2019.
This change will apply from the date of announcement. At the time of publishing, this change had not yet become law.
Cost of managing tax affairs
We have changed the way you show amounts at item D10 Cost of managing tax affairs. The cost of managing your tax affairs is now separated into the following three categories:
- interest charged by the ATO
- litigation costs
- other expenses incurred in managing your tax affairs.
Claim the relevant costs for each of these categories at item D10.
Personal superannuation contributions
Most individuals under 75 years old can now claim a deduction for personal superannuation contributions, regardless of their employment arrangement. Previously, only those who were self-employed or earned less than 10% of their total income as an employee were eligible to claim this deduction. You must:
- meet other eligibility rules
- be aware of the effects of claiming this deduction.
- You claim this deduction at item D12.
For more information, see Claiming deductions for personal superannuation contributions.
Superannuation contributions on behalf of your spouse - new income threshold for tax offset
The spouse income threshold has been increased from $10,800 to $37,000. If your spouse's income is $37,000 or less, you can claim up to the maximum $540 tax offset for superannuation contributions you make on behalf of your spouse. The $540 tax offset gradually reduces to nil as your spouse's income increases from $37,000 to $40,000.
You cannot claim this offset if your spouse:
- exceeded their non-concessional contributions cap, or
- had a total superannuation balance of $1.6 million or more on 30 June 2017.
You claim this offset at item T3.
For more information, see Tax offset for super contributions on behalf of your spouse.
Defined benefit income streams
From 1 July 2017, the defined benefit income cap will limit the amount of tax-free income you can receive from a 'capped defined benefit income stream' (pension or annuity). The defined benefit income cap will generally be $100,000. Check with your super fund to determine if your income stream is a capped defined benefit income stream.
You may have additional tax liabilities if your capped defined benefit income exceeds the defined benefit income cap, and you are:
- 60 years old or older, or
- a death benefit dependant and the deceased was at 60 years old or older.
- Show income from a defined benefit income stream at item 7.
For more information on capped defined benefit income streams, see:
- Changes to taxation of defined benefit income streams
- New transfer balance cap for retirement phase accounts
Residential rental properties - travel expenses
From 1 July 2017, you are not entitled to a deduction for travel expenses relating to your residential rental property, unless an exception applies. These expenses are also not recognised in the cost base of the property for CGT purposes.
Residential rental properties - limit on deductions for second-hand depreciating assets
From 1 July 2017, you are generally not entitled to a deduction for decline in value of certain second-hand depreciating assets in your residential rental property which you:
- contracted to acquire, or otherwise acquired, at or after 7.30pm on 9 May 2017, or
- used, or had installed ready for use, for any private purpose in 2016–17 or earlier, and for which you were not entitled to a deduction for decline in value in 2016–17.
Reportable fringe benefits amounts
The government has made changes to the treatment of fringe benefits under the income tests for net medical expenses tax offset, dependant (invalid and invalid carer) tax offset, zone and overseas forces tax offset, low income superannuation tax offset and rebate income to calculate seniors and pensioners tax offset. The amount at W item IT1 will no longer be adjusted down when we calculate these tax offsets. The same changes apply to the amount at label S in the Spouse details section of the tax return.
Temporary budget repair levy
The temporary budget repair levy no longer applies.A list of new initiatives incorporated in this year's Individual tax return instructions.