How does the 2018 Federal Budget affect you?Thu, 10th May 2018
This year’s Federal Budget provides a number of policies aimed at various demographics. But what do these changes mean to you?
I own a small business …
As part of the Federal Government’s 10-Year Enterprise Tax Plan it has expanded the range of businesses that will benefit from the lower 27.5% tax rate by extending the turnover threshold 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.
Small businesses will also now have longer to write off business purchases. The Government has extended the $20,000 instant asset write-off for another 12 months to June 30, 2019. The initiative was originally introduced in the 2015-16 budget and has been continued at a cost of $350 million over the forward estimates. A greater number of small businesses can now also access a range of tax concessions with the small business entity turnover threshold rising from $2m to $10m.
Elsewhere the Government is spending more on a crackdown on the black economy. So from July next year the Government will introduce a limit of $10,000 for cash payments made to businesses for goods and services. It argues many payments are falling outside the tax system. It will set up a Black Economy Taskforce targeting sectors of under-reported income. The Government hopes this will bring in $5.3 billion over four years.
The Government is also trying to ease the red tape faced by small business by streamlining the GST reporting process. The current twenty question Business Activity Statement GST worksheet has been replaced with businesses now only needing to respond to three questions.
I’m an entrepreneur …
Any middle-aged entrepreneurs out there will be buoyed by the Government’s announcement that it has expanded its Entrepreneurship Facilitators Program by allocating $17.7m to it. 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.
I live on the Mornington Peninsula …
Locally, the Mornington Peninsula Shire Council could look for Federal support in community and infrastructure projects with a proposed $200m in additional spending on the third phase of the Building Better Regions Fund. This follows from the Regional Growth Fund’s $272m investment in larger regional infrastructure projects. Interestingly it appears that the Shire has been unsuccessful or otherwise made no application for either infrastructure project or community investment funding through the program.
I’m a low-income earner …
On an individual level, more modest tax cuts are aimed at the lower income levels in the immediate term with a new tax offset at $530. The Government clearly intends to test the patience of the electorate with other measures being phased in 2023/24 when the bottom two tax brackets will increase to $41,000 (was $37,000) and $120,000 (was $87,000) and the old tax offset increased by $200. The final phase will occur in 2024/25 when the top tax bracket will increase to $200,000 and the old 37% tax bracket abolished.
The extended period over which the tax cuts will be implemented means that economists do not consider the measures will to add much growth (in the short-term at least) to the economy.
I’m a retiree …
The Government is also looking after Baby Boomers with a proposal that superannuation fund members aged 65 to 74 who are in their first financial year after their retirement and have less than $300,000 in superannuation can make a voluntary superannuation contribution without needing to meet the work test. The work test prohibits people who work less than 40 hours in any 30-day period within a financial year from making voluntary contributions.
The Government has proposed an introduction of a three per cent annual cap on certain fees charged by superannuation funds on accounts with balances below $6,000 and will remove exit fees on all superannuation accounts. This means from 1 July 2019, it will not cost you anything to leave a superannuation fund. However, you will need to check if switching funds affects any insurance coverage.
I’m on a pension …
In other news, the Pensions Loan Scheme will be expanded to enable everyone over the pension age to effectively mortgage their home to the Government to access fortnightly payments. These payments are now as much as one-and-a-half times the pension rate. This policy is aimed to help keep older Australians living in their own homes.
Finally, from 1 July 2019 pensioners can earn up to $300 per fortnight (up from $250) from employment without reducing their age pension payments under measures proposed by the Government. This will allow Pensioners to earn more money without impacting their pension under the Pension Work Bonus scheme, with the program being expanded to include the self-employed.
Not sure what the Federal Budget means to you or your business? Feel free to get in touch on 5975 7588 for some free advice and guidance.
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