The 2018 Federal Budget includes initiatives to help Australian small businesses better adapt to the changing economy and make it easier to focus on growing their business.
Instant asset write-off extended
The instant asset write-off has been extended for another 12 months to 30 June 2019. This applies to asset purchases of up to $20,000 and for companies with a turnover of less than $10m.
Reducing red tape
Building on measures introduced in last year’s Budget, the Federal Government has streamlined the GST reporting processes for small businesses. The 20 question Business Activity Statement GST worksheet has been replaced, with businesses only needing to respond to three questions.
Tax reform for small and medium business
As part of the Federal Government’s 10-Year Enterprise Tax Plan, the turnover threshold to be eligible for the 27.5% tax rate has now been extended from $25m to $50m. While this has already been legislated, it means a broader range of businesses will benefit from a lower tax rate commencing 1 July 2018.
The tax reform includes a proposed increase to the unincorporated small business tax discount rate from 5% to 8% (capped at $1,000). The Federal Government expects this to increase to 16% by 2026-27.
A greater number of small businesses can also now access a range of small business tax concessions with the small business entity turnover threshold rising from $2m to $10m.
The Federal Government has allocated a proposed $17.7m to expand its Entrepreneurship Facilitators Program. The program, which provides training, mentoring and support with a focus on those aged 45 years and over, would be extended into a number of new locations around Australia.
Promoting Australian exports
To make it easier for small and medium businesses to enter, or expand into, offshore markets and capture export opportunities, the Federal Government has allocated $20m for SME Export Hubs.
According to the Federal Government: “The hubs will foster greater co-operation between Australian businesses, helping them grow as they work together to sell their products to the world.”
Protecting small businesses
In his speech to Parliament, Treasurer Scott Morrison said: “The Government is making sure small businesses don’t get ripped off by businesses that deliberately go bust to avoid paying their bills.”
To help ensure that small businesses aren’t exposed to risk due to illegal phoenixing - when a new company is created to continue the business of a company that has been deliberately liquidated to avoid paying its debts - the Federal Government has proposed improving unfair contract terms protections and providing small businesses with access to better dispute resolution mechanisms.
The Federal Government said it proposed implementing the recommendations of its Black Economy Taskforce, targeting sectors where there is higher risk of under reporting of income. This is expected to bring in $5.3bn over the next four years.
These measures include outlawing large cash payments of greater than $10,000 in the Australian economy.
Keep in mind
Any changes outlined in the Federal Budget must be passed by both the House of Representatives, which is controlled by the government, and the Senate, where proposed expenditures are subject to examination within Senate estimates hearings. This means any proposed cuts or changes outlined above may not necessarily become law.
Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information.