Of course there’s always a few hidden worries that come out of any Federal Budget announcement. However, we’ve taken a good look and can tell you that for most of our clients, it’s looking pretty positive.
Small to Medium Enterprises are being given an extension to the $20,000 asset instant tax write-off until 30 June 2019 – one of the winning tax strategies of the modern era (which most of our business clients can apply). Further, there’s some other positive measures, like simpler BAS reporting, improvements to protections for small business owners from unfair contract terms and continuation of the 10-year Enterprise Tax Plan.
There’s also some individual tax relief for many low to medium income earners, with the average Aussie set to receive a further $530 tax break in 2019. This is the news that has taken up the lion’s share of the media this week.
We’ll be keeping an eye on what happens with the new $250 million Skilling Australia Fund as it plans to invest in building a skilled labour force – which could have positive impacts for our SME’s, their teams and their bottom line.
And of course, if you wanted to know who the losers are from this budget, the list starts with some big taxes being applied to smokers, famous people and foreign-owned hotel companies.
We’ve broken it all down for you below, so take a read, and make sure you get in touch with the team if you have any questions.
GOOD NEWS: Small business owners can grow with confidence
There’s no doubt about it. Australia’s two-million SME’s are the backbone of our national economy, so it makes sense that the Federal Government should look after you all.
Here’s the plus side, the Budget has delivered mostly good news for SME’s, so if you’re a manager, director or owner – we’ve mapped out the key points to consider for the upcoming financial year’s planning.
The $20,000 instant write off for small business has been extended to 30 June 2019 (at least). This means businesses earning less than $10m per year can immediately deduct purchases of eligible assets costing less than $20,000 – as long as they are first used or ready to use by 30 June (there’s a few ineligible items like horticultural plans and in-house software, so if you’re unsure, ask us about it).
There’s a crackdown on BIG cash payments. From 1 July 2019, there will be a limit of $10,000 for cash payments (as rare as they are) made to businesses for goods and services. Anything above this, will need to be done via electronic payment system or cheque.
Simpler and smarter systems are in place for BAS and Business Registration, with an intention to save the average business owners an estimated $590 per year in time.
From 1 July 2019, businesses will no longer be able to claim a deduction for payments to their employees where they have not withheld any amount of PAYG from these payments (despite the fact that PAYG withholding requirements apply). This applies to payments made by business to contractors too, where the contractor does not provide an ABN and therefore does not withhold any amount of PAYG.
While we’re on contractors, it’s also important to note that the contractor payment reporting system – previously limited to the building, construction, cleaning and courier industries – will be expanded to include security providers, investigation services, road freight transport and computer system design and related services. So if this sounds like it could be you, or part of your business model – check in with us soon!
The 10-year Enterprise Tax Plan continues. This includes the 27.5% tax rate, which applied to businesses with a turnover up to $25 million per year (in the 2017-18 Budget), expanding to cover businesses with an annual turnover of up to $50 million. Further, the unincorporated small business tax discount rate has increased from 5% to 8% (up to a cap of $1000). This will increase further to 16% by 2026-27.
One of the hidden gems we found for small business in the budget, is that additional protection has been given to SMEs by extending unfair contract term protections. In addition, the new Australian Financial Complaints Authority will help give more small businesses access to quick and cheap dispute resolution processes. Fingers crossed this change will assist with any stressful human resource issues, which (as many of you know) can often be resource intensive and costly.