2018/2019 Federal Budget Recap
Rede Accountants Gold Coast, Brisbane & Toowoomba
Mr Morrison brought down the Annual Federal Budget on 8 May. There was not that much meat in the document. It was a ‘steady as she goes election federal budget’.
Other than talk about deficits and spending, what impacts the man in the street and business?
Proposed tax cuts for taxpayers earning up to $90,000 in 2018/2019. Maximum benefit $530. There are some concessions also to $125,334.
However, the rebate is only available when the tax return is lodged.
Ongoing changes to personal tax rates effective from 2022/2023 to reduce ‘bracket creep’.
There is a lot of water to pass under the bridge by then!
The Medicare Levy will NOT be increased.
The ATO has been provided with extra financing to investigate taxpayers’ returns.
The $20,000 immediate write off of equipment purchases for small business has been extended to 30 June 2019. Businesses with turnover over $10million do not qualify.
Black Economy Crackdowns
- From 1 July 2019, Cash payments to business for goods and services will be limited to $10,000.
- Expand the contractor payment reporting system from 1 July 2018 for security providers, investigators, road freight transport and computer design and related businesses.
- From 1 July 2019, payments to employees or contractors will not be tax deductible if tax file numbers or ABN’s have not been supplied.
Illegal phoenixing reforms.
Phoenixing is a situation where directors operate a company, they don’t pay all the company debts and effectively walk away from the company operations leaving a trail of debt owing. The same people (or close associates) then set up a new company in the same industry and recommence trading through this new clean company.
- The ATO will extend the power to withhold tax refunds and apply to other tax debts.
- Extend director personal liability to company GST, luxury car tax and wine equalisation tax debts
Research and Development tax incentives.
The incentives have effectively been slightly diminished for small businesses and significantly for large business. Whilst little was made of this on the night, the expected savings are some $2 Billion over 4 years.
A lot of small print amendments. Some are sleepers for the moment but could become very significant. For example, the expected introduction of further rules for drawing funds from a company to use for personal use has been delayed a further year.
No major change for the first time in many federal budgets.
Soon a self-managed super fund will have a limit of 6 members rather than the current 4.
Fees charged by superannuation funds will be capped at 3% of balances for balances below $6,000 whilst exit fees will be banned.
Insurance within superannuation funds will move from a default situation to an opt-in situation for members with less than $6,000, under 25 years of age and members who have not made recent contributions. In plain English, the member will have to elect if they want Insurance coverage rather than it automatically being charged to their balance.
Want more information on how the new Federal Budget will affect you and your business? Contact us here.