By now, you will have heard all the commentary around the 2017 Federal Budget but what does it mean for your business? Following are some of the key measures that will have the most impact on SMEs
The government has decided to extend the instant write-off of assets valued at up to $20,000 until 30 June 2018. This has also been extended to businesses with a turnover of up to $10 million, meaning even more businesses can take advantage of this tax break. Talk to your accountant to see if this is a suitable strategy for your business.
The federal government’s Ten Year Enterprise Tax Plan, which involved gradually reducing the tax rate for all businesses, is continuing to be rolled out. Incorporated small businesses with turnover of up to $10 million will have their tax rate cut to 27.5%. The tax discount for unincorporated small businesses will also be gradually increased from 5% to 16% over the next 10 years.
The federal government is offering incentives of up to $300 million to states that reduce or eliminate restrictions on SMEs, including regulatory frameworks that impede competition.
The government has committed $75 billion for infrastructure programs including Sydney’s new airport, the Snowy Hydroelectricity scheme, a national rail fund, road projects in WA and the inland rail link between Brisbane and Melbourne. It not immediately clear how much of this is new funding but the projects could present new opportunities for SMEs.
While there haven’t been any changes to personal tax rates in this year’s budget, the Temporary Budget Repair Levy will no longer apply for people earning over $180,000 from 01 July 2017. However, the Medicare Levy will be increased by 0.5% to 2.5% for all taxpayers (except those who are exempt due to their low income) from 01 July 2019 to help fund the cost of the NDIS and Medicare. Business owners may find staff are seeking to negotiate increased remuneration to compensate for the loss of income.
For those with outstanding Higher Education Loan Program (HELP) debts, the government is proposing to introduce changes that include a decrease in the minimum repayment threshold as well as amendments to repayment rates. These changes will not only impact people who already have HELP debts, it may discourage people from accessing higher education in the first place, further exacerbating the current skills shortage over the long term.
Most of the more significant proposed budget measures impact foreign property investors but there are some measures to help fist home buyers save for a deposit and make it easier for empty-nesters to downsize. First home buyers will be able to withdraw up to $30,000 of voluntary super contributions for a first home deposit, from 01 July 2017. For those wanting to downsize, people over the age of 65 can put an additional $300,000 in to super from the sale of their house. The government is proposing these changes to come into effect from 01 July 2018. The federal government is also hoping to work more closely with state and territory counterparts to set housing supply targets and facilitate planning and zoning reform to make more housing stock available. This will be done under a new National Housing and Homelessness Agreement and is hopefully good news for businesses in the construction and property development sectors.
There were few surprises in the budget for SMEs though it was good to see the government’s continued focus on making life a bit easier for Australia’s small business owners. Of course, it remains to be seen which of these measures actually get passed into legislation. If you would like more information on how these changes might impact your business, please get in touch for a free coffee and a chat.