Scott Morrison outlined key initiatives to strengthen the Australian economy in last night’s 2018 budget speech. Though light on new initiatives, these are the key measures in place impacting SMEs to keep you in the loop.
Instant asset write-off extended
Just like the leaks suggested, the $20,000 instant asset tax write-off, a policy first launched in 2015, is extending for another 12 months to June 30 2019. This comes at a cost to revenue of $350 million across four years and applies to asset purchases of up to $20,000 and for companies with a turnover of less than $10 million.
Less red tape
Adding to measures introduced in 2017, the Government is streamlining GST reporting processes for around 2.7 million small businesses. The 20 question Business Activity Statement GST worksheet has been replaced and businesses only need to respond to three questions.
As part of the 10 Year Enterprise Tax plan to reduce company taxes for all businesses from 30 to 25 per cent, the turnover threshold to be eligible for the 27.5% tax rate is extended from $25m to $50m commencing 1 July 2018. Lower taxes are set to assist small businesses invest, grow, create more jobs and stay competitive in a global economy. A larger number of businesses can also access a range of small business tax cuts with the small business entity turnover threshold rising from $2m to $10m. While the government is implementing lower taxes, it’s also cracking down on under-reporting revenue – expected to bring in $5.3bn over the next four years. These measures include outlawing large cash payments greater than $10,000 in the Australian market.
Supporting Australian export
The Government has secured landmark export deals which will allow Australian businesses to access new markets. It’s signed export trade deals with China, South Korea and Japan plus the Trans-Pacific Partnership (TPP-11). To make it easier for SMEs to enter and expand into offshore markets, the Government has allocated $20m for SME Export Hubs that are aimed at fostering business collaboration to break into new markets.
Protecting small business
Greater measures are being put in place ensure small businesses don’t get ripped off by tackling illegal phoenixing – when a new company is created to continue the business of a company deliberately liquidated to avoid paying bills. To reduce risk, the Government is also lifting the standard of dispute resolution pathways.
Much of what’s revealed is a continuation of positions taken in past years – from the $20,000 instant asset tax write-off to tackling the black market and dishonest closures.
Any small business wins outlined in the Federal Budget must be passed by both the House of Representatives, which is controlled by the government, and the Senate. This means any proposed cuts or changes outlined above may not necessarily become law.