The 2019 federal budget was released which was the first (and possibly the last) budget for Treasurer Josh Frydenberg and our new Prime Minister Scott Morrison. The budget is set to be a critical tool in the Liberal Government’s push for re-election and we wanted to take the time to go through just a couple of the key announcements of the budget in the hopes that it gives you some clarity on what this means for you, your business, and your family.
The Treasurer opened the budget briefing by stating that Australia is in surplus for the first time in 12 years. He then went on to state that this surplus is expected to continue for years to come. Hot on the heels of this announcement, the Treasurer took this opportunity to extol the virtues of the Morrison Government and talked about the ongoing commitment to Australia’s economic future.
Treasurer Frydenberg then mentioned that there were going to be a decrease in taxes for low- and middle-income earnings; positive information for the public which is expected to drive more votes to the Liberal party.
Key announcements from the budget
- There is going to be an increase in the overall threshold for the instant asset write off which businesses can claim
- Individual tax payers are going to see further tax cuts
- Superannuation policies are going to be flexible as a means to helping people to plan their finances for retirement
- More money will be invested into rising power bills in an effort to cut these expenses
- There will be a large investment in infrastructure across Australia
While it’s encouraging that the government is paying attention to the issues that people are concerned about, it might be a question of is it too little too late? The budget is coming at a time of increasing hardship for the world where we are seeing people frustrated with Australia’s policies on immigration, climate change, mining, agriculture, resource management and more. Not to mention the increasing ridiculousness of Australia’s prime ministers swapping places like no tomorrow.
Ultimately the government is hoping to guarantee the essential services that Australians rely on, including Medicare, training, education, disability services, immigration, and defence – among others.
Key changes on the cards
Extension of the instant asset write off
We have seen this extension take place year after year as the government recognises the impact that small business has on our wider economy. This extension applies to small businesses with a turnover of less than $10 million and allows them to claim upfront on assets which cost less than $25,000.
There is a big change this year though, the asset cost has been increased to $30,000 and the turnover threshold is $50 million for expenditure. This is great news for any company where you were previously over the $10 million threshold because you can now claim for this asset write off.
Single touch payroll (STP) data collection expansion
The government is taking the step of expanding the use of data which is being collected under the single touch payroll measure. This new measure requires that employers are reporting employee payroll data in real time and this must be done to the ATO through their software. This will apply from July 2020. Any small business which is subject to the STP should be starting the process of transitioning to the system on 1 July 2019.
More funding for the ATO to audit and review files
The government is targeting tax planning strategies which are being carried out by large public companies and private groups, including trusts and high wealth individuals. As a result, the ATO’s Tax Avoidance Taskforce are being given a further $1 billion in funding across 2020 and 2023 which is being used to review and investigate tax evaders. In addition to this, more funding is being given to the ATO to target unpaid tax and super liabilities. Again, this money is being spent to target large businesses and high wealth individuals.
Minor indirect tax changes
You won’t see any changes to the GST in the budget this year, but there are some tax changes with alterations to the luxury car refund tax, with increases on the cards, and an extension to the indirect tax concession scheme for diplomatic, consular and international organisation concessions.
These are just a couple of the changes you can expect to see taking place – for a more in-depth look at what the government is hoping to achieve take a look at the budget online. If you are looking to take advantage of the small business rebate with a purchase, then call us on 1300 283 344 or contact us online to get a great business loan at a great rate.