Individuals deriving taxable income over $180,000 will see a decrease in the effective highest marginal tax rate from 49 per cent in the 2016-17 year to 47 per cent in 2017-18, given the removal of the two per cent temporary budget repair levy.
In order to be taxed at a lower rate, individual taxpayers in the highest tax bracket may wish to consider delaying income into the 2017-18 year. On the other hand, these taxpayers may also consider bringing deductions forward into 2016-17, as such amounts will be deducted at the higher effective tax rate of 49 per cent.
Any action taken should ensure it does not breach general anti-avoidance provisions or any specific provisions that could curtail activities such as the prepayment rules.
If you are proposing to either defer deductions or bring forward income, then you may wish to contact your CPA Australia-registered tax agent.