Get your head around what’s in and what's out for business owners and the self-employed in the 2018 budget.
$20,000 instant asset write-off: In a surprise move, and contrary to expectations but much to the relief of many SMEs, the write-off has been extended yet again in full for a further 12 months, meaning businesses can continue to claim a deduction for goods costing up to this amount until 30 June 2019.
Research grants and funding: A number of grants and funding boosts were announced in a targeted move to support crucial and high-growth industries -
- $1.9 billion over 12 years in scientific research infrastructure.
- $20 million in SME Export Hubs, in a bid to foster greater collaboration between businesses and identify new export opportunities.
- $200 billion investment in defence over the next 10 years, and a new Sovereign Industrial Capability Grants Program worth up to $17 million annually to help SMEs in the defence sector buy essential equipment.
- Additional funding for the fintech sector (amount unspecified).
- Reform of the Research and Development Tax Incentive, including greater transparency of eligibility requirements and claimants.
- $200 million for a third round of the Building Better Regions Fund to support regional infrastructure.
- The creation of a $20 million National Forestry Industry Plan to protect the forestry industry and its 67,000-strong workforce.
- $140 million for the Australian film industry.
- Funding to support farmers and primary producers, in the form of $51.3 million to expand the existing network of agricultural trade counsellors in high-growth export markets; $6.3 million to access agricultural and veterinary chemicals; and $4.7 million to improve collection of agricultural labour force data to boost efficiencies.
Training: An additional $250 million will be added to the Skilling Australians Fund, which supports vocational education and training to upskill Australian workers.
Black economy and tax evasion: A number of measures were introduced in a bid to crack down on tax evasion, the black market and the cash economy. These include -
- Extra resources will be given to enforcement agencies to detect and disrupt black economy participants.
- The government’s procurement procedures will be changed to incentivise tax compliance in supply chains, while deductions for non-compliant payments will be removed in a bid to crackdown on black economy operators.
- Plans for the controversial new identification systems for company directors (DINs) will progress.
- An economy-wide cash payment limit for cash transactions of $10,000 plus will be introduced in an effort to reduce tax evasion.
- The Tax Practitioners Board will receive additional funding to enforce the compliance of tax agents.
- The taxable payments reporting system will be expanded to contractors in industries with higher identified risks of not reporting their income.
Red tape: The government claimed that a streamlining of GST reporting has delivered an average $590 annual cost saving to SMEs by reducing the number of BAS GST questions to three from 20.
Infrastructure: Infrastructure spending was targeted primarily on transport and scientific projects -
- $2.4 billion will be invested in public technology infrastructure. This includes $225 million specifically to improve the accuracy of GPS in Australia with the aim of boosting productivity for businesses, as well as $29.9 million to grow capabilities in artificial intelligence (AI).
- $41 million was allocated for the creation of a national space agency, which will rely heavily on the input of specialist SMEs.
- $24.5 billion invest in new “nationally significant” transport projects, in addition to previously committed funds to the Melbourne to Brisbane inland rail link and Western Sydney Airport.
GST: As expected, there is no change to the rate of the GST. However the tax will be extended to Australian hotel bookings made through offshore websites.
Personal income tax cuts: The government unveiled a seven-year plan to abolish the 37 per cent tax bracket to tackle bracket creep. On completion, this would bring 94 per cent of Australian taxpayers to a rate of 32.5 per cent or less compared with 63 per cent at current levels.
Immediate tax relief for low and middle income earners equivalent to around $540 per year, as had been widely reported before the budget was handed down.
Childcare: The existing two current childcare payments will be simplified to one single payment from 2 July 2018.
As expected, the budget contained few sour grapes and more sweeteners given it is likely to be the last budget before the next federal election.
Business tax cuts: As forecast, because of the problems, passing legislation to deliver corporate tax cuts to larger businesses and the community backlash against the financial sector arising from the banking royal commission, the government pulled plans to cut the company tax rate for larger firms. No new cuts to the corporate tax rate will be made, although the previously announced cuts for SMEs remain on track.
Medicare Levy surge: The government also backed away from a previously touted plan to increase the Medicare Levy.