2018 Federal Budget Update
Understand the key takeaways from the 2018 federal budget and how it will affect your business.
What is the budget?
The Australian federal budget is prepared by the Treasurer and presented to Parliament. The budget is typically delivered on the second Tuesday of May every year and outlines the proposed revenue and spending of the Australian Government for the upcoming financial year. The federal budget is also a political statement of the government’s intentions and priorities for the upcoming financial year and beyond.
The majority of government revenue comes from income & company tax, sales tax (GST) and interest and dividends. The government needs this revenue to pay for the public goods and services it provides including education, health, defense, infrastructure, welfare and much more.
The small business budget wish list
We asked 1000 small businesses what they want from this year’s budget. Here are the results.
Instant asset tax write-off extension
Better tax offsets and incentives
Simplified tax processes and rules
Improved infrastructure to rural areas
Reduction in the cost of electricity
Subsidies for training & upskilling
What did the 2018 budget deliver?
From extensions to tax cuts. Here are the 6 key changes that affect small businesses.
Instant asset write-off extended
The $20,000 instant asset write–off has been extended for a further 12 months to 30 June 2019. Small businesses with an annual turnover of up to $10 million will now have additional opportunities to reinvest in their business and replace or upgrade their assets.
Personal income tax brackets
The Government has also announced its intention to simplify tax rates. This starts from 1 July 2018 with gradual changes to the tax bracket thresholds and is realised in it’s entirety by 1 July 2024 when the 37% tax bracket is removed altogether.
The R&D tax offset has changed completely. If your annual turnover is $20 million or more, your offset is based on how much you spend on R&D as a percentage of total expenditure. For companies with annual turnover below $20 million, the refundable R&D offset is 13.5 % above your company tax rate. The government is cracking down on fraudulent R&D claims so be prepared for more rigorous documentation and reporting.
Low to middle income tax offset
A new low and middle income tax offset will deliver an extra $200 – $530 in tax payers pockets depending on your income level. Starting in the 2018-19 year the offset is received as a lump sum on assessment after an individual lodges their tax return for the 2018/19 financial year.
Training & upskilling funding boost
The government has allocated $250 million for the Skilling Australians Fund that supports apprenticeships and traineeships to fuel the growth of small businesses. It’s also allocating $189 million to help mature-age Australians adapt their skills for the digital economy.
Black economy crackdown
In a bid to remove ‘off the books’ cash payments the government has extended the taxable payments reporting scheme that’s currently in place for building and construction industries to courier and cleaning industries from 1 July 2018 and the security & investigation services, road freight transport and computer system design industries from 1 July 2019.
Note: The 2018 budget changes are subject to parliamentary approval.
The 2018 budget unpacked
Reckon MD Sam Allert dissects the 2018 budget and how it will affect small business.