The Federal Budget date approaches yearly and all businesses and individuals wait in anticipation to see if they will benefit from the proposed budget measures and have a couple more dollars in their pockets. The 2018 – 2019 budget was no different. Here is a snapshot of how some of the measures announced in the budget could affect you. Remember these are proposals that may change as they pass through parliament.
The budget aims to reduce the tax burden on individual tax payers over the next 7 years. The changes effective from 1 July 2018 will mostly benefit low and medium income earners through the introduction of a Low and Middle Income Non-Refundable Tax Offset of a maximum of $530 per year for earners up to $125,000. There are also some changes in the tax brackets increasing the 32.5% bracket to $90,000. The Medicare levy remains unchanged at 2%.
The budget promises to boost ATO funding to allow ATO to extend data matching programmes relating to reporting of foreign sourced income and over claiming of deductions. The much talked about universal cap on work related expenses was not introduced.
SMALL BUSINESS TAX
There were few surprises for small businesses.
The $20,000 small business asset write-off applicable to businesses with aggregated turnover of less than $10 million is extended for another year to 30 June 2019.
The roll out of the black economy reform, will impact legitimate enterprises, including a limit of $10,000 for cash payments to businesses for goods and services. The extension of the taxable payment reporting system currently applicable to building and construction industry, is also effective for the courier and cleaning industry from 1 July 2018. Businesses will no longer be able to claim deductions for payments to their employees or contractors who have not provided an Australian Business Number (ABN), where they have not withheld any PAYG from 1 July 2019.
Costs associated with holding vacant residential or commercial land – from 1 July 2019 such costs, including interest costs, will be denied as deductions but may be included in cost base subject to satisfying existing cost base tests. This will not apply to land used to carry on a business, or to expenses incurred after property has been constructed on land that has received occupancy approval and is available for rent.
After the significant changes introduced during the super reform effective 1 July 2017, there were still a few measures addressed in the budget.
Changes to superannuation insurance for funds with balances below $6,000, taxpayers under 25 and inactive accounts with no contributions for 13 months from 1 July 2019. The administration and investment fees charged will be capped at 3% for accounts below $6,000 and the ATO will also expand their data matching to reunite inactive super accounts with balances below $6,000 with members from 1 July 2019. There are also some opt out rules for high income earners with multiple employers to avoid breaching their $25,000 concessional contribution caps from 1 July 2018.
Want to get in touch with an AFM advisor to see how these changes might affect your business? Get in touch with us here.