The 2018 Federal Budget

By businessi | 09/05/2018

Here's what you need to know about the 2018 budget update:

Business

Some help for business was extended:

  • The instant-asset write off for purchases up to $20,000 will be extended for small businesses with turnover up to $10 million. This is fantastic for small business.
  • $15 million over three years to the Australian Taxation Office to support the modernisation of payroll and superannuation reporting. The funding will be used to support small businesses with fewer than 20 employees during the transition to Single Touch Payroll Reporting from 1 July 2019.
  • The Restart Wage Subsidy for Australians aged 50 years and over will be expanded providing up to $10,000 to employers to support workers to continue their career.
  • There will be $17.7 million to support entrepreneurs through the Entrepreneurship Facilitators Program, with a focus on those aged over 45 years. This will help identify business opportunities and provide mentorship.
  • There will be a new Skills and Training Incentive which will provide $2,000 per worker to fund re-skilling opportunities for eligible individuals aged 45 to 70. This will be matched by either the individual or the employer.
  • The contractor reporting system will be extended from 1 July 2019 to security providers, investigation services, road freight transport, computer system design and related services.

Individuals

Small concessions in income tax rates and pensions for self-funded retirees:

  • Immediate tax offset of up to $530 per year for low and middle income earners and up to $1,060 for a working couple earning between $48,000 and $90,000 annually.
  • Taxpayers earning less than $37,000 will only be eligible for a maximum tax offset of $200.
  • The government will increase the 32.5% tax bracket to $90,000 providing a tax cut of $125 per year.
  • By 2024, the government has committed to simplify and flatten the personal tax system by removing the 37% tax bracket entirely. They plan for 94% of taxpayers to pay 32.5% tax or less by 2024.
  • The pension work bonus will increase to $300 per fortnight (up from $250 per fortnight). The work bonus will also be extended to self-employed people. This means that the first $300 of income from work each fortnight ($7,800 per year) will not count towards the pension income test.

Superannuation

Some interesting changes for SMSF and super in general:

  • The Work Test - Australians aged 65 to 74 with a total superannuation balance below $300,000 will be able to make voluntary contributions for 12 months after they finish working. Currently people aged 65 to 74 must work a minimum of 40 hours in any 30-day period in the financial year in order to keep making contributions to superannuation – this is known as the work test.
  • Making it easier for Australians to consolidate super accounts or move providers by banning exit fees.
  • Making it easier for the ATO to reunite people with their lost or inactive super accounts.
  • Not allowing superannuation companies to enforce insurance policies on young individuals, particularly those with low balances and those not making contributions.
  • If your SMSF has a “clean” audit record, from 1 July 2019 it will only need to be audited every 3 years. This should save costs and time for SMSF trustees going forward.
  • The allowable number of SMSF members will increase from 4 to 6 from 1 July 2019. This is great for families who want to include their kids in their SMSF.
  • From 1 July 2018, the Government will allow individuals whose income exceeds $263,157, and who have multiple employers, to nominate that their wages from certain employers are not subject to the superannuation guarantee (SG). The measure will allow eligible people to avoid unintentionally breaching the $25,000 annual concessional contributions cap as a result of multiple compulsory SG contributions. Employees who use this measure could negotiate to receive additional income, which is taxed at marginal tax rates.
budget_update_2018

Child Care

A new child care package will be implemented from 2 July 2018, which will help parents with children aged 0-13 work, train, study and volunteer:

  • One child care subsidy, replacing the two current child care payments – the child care benefit and rebate. It will be paid directly to services.
  • Families earning $186,958 or less will have no cap on the amount of child care subsidy they claim. Families earning over $186,958 and under $351,248 will benefit from an increase in the current cap of $7,613 to $10,190 per child, per year.
  • The child care subsidy will be dependent upon 3 factors: combined family income, activity levels of parents and the type of child care service.
  • Parent’s activity can include paid work, study and training, unpaid work in family business, looking for work, volunteering and self-employment. The higher the level of activity the more hours of subsidised care families can access, up to a maximum of 100 hours per fortnight.

Agriculture

The farming sector has not been forgotten:

  • $225 million for better GPS technology to allow farmers to access precision agricultural technologies that allow them to more accurately sow seeds in between rows of harvested crops and manage the distribution of water, fertiliser and herbicides. This will also help people with no sense of direction.
  • $51.3 million over four years to boost growth in Australia’s agriculture and food exports to secure Australia’s position as a world leading agriculture exporter and support agriculture and export jobs.
  • $36.9 million to provide greater access to satellite data that identify physical changes to the Australian environment. This is to help agricultural, mining and marine industries improve their efficiency, reduce waste and improve environmental management practices.

Infrastructure

The government committed $24.5 billion to rail and road projects across Australia. Major announcements for SA:

  • $1.4 billion for Adelaide North South Corridor future priorities, including $177 million for the Regency Road to Pym Street section.
  • $220 million for the Gawler Rail Line electrification.
  • $160 million for the Joy Baluch Bridge duplication.

Libation

Clearly the Treasurer likes a tipple:

  • And if you like Craft beer……All beer kegs larger than 8 litres will be taxed the same. Previously, beer sold in kegs larger than 48 litres had been taxed at a lower rate than smaller kegs, favouring larger producers.  Yeehah!!!

The Losers

There are always losers, but this time we think they are targeting the right people:

  • Tech giants such as Amazon, Google and Facebook will be forced to pay more tax after another review of the digital economy.
  • The cash economy will be targeted in respect of tax avoidance and money laundering. The government would like to make cash payments over $10,000 illegal.
  • More loopholes for multinational companies that allow them to avoid tax will be closed.
  • The trial of cashless debit cards for certain welfare recipients to stamp out rorting and drug use will be extended.
  • Overseas websites selling holiday accommodation in Australia will need to start charging GST from 1 July 2019.

To discuss how any of these changes may affect you or your business please contact our office on 08 8431 7444

Posted in Accounting, SMSF