The 2018 Federal Budget was announced on the 8th May and the theme of this year’s budget wasn’t so much about tax savings or incentives, but on compliance and ensuring business is doing the right thing. Businesses in Australia are set to face tighter tax rules & tougher enforcement from the government. Below is a snapshot of items that may impact your business:
Tax Cuts & Incentives
- Extension of $20,000 instant asset write-off for businesses with a turnover of up to $10 million till 30 June 2019. This means if you need to invest in assets for your business, you will get a tax deduction equal to their value in the first year, up to $20,000 per item.
- The threshold for the 27.5% tax rate for business can increased to include those with turnover of up to $50 million.
- Significant changes to the calculation of the R&D tax incentive will commence for income years beginning on or after 1 July 2018. Businesses with more than $20 million a year in revenue that invest in R&D stand to win – but there will be a cap for the smaller end of town.
Crackdowns on the cash economy
- From 1 July 2019, cash payments of more than $10,000 made to businesses for goods and services will be banned as the Turnbull Government seeks to crack down on the $50 billion “black economy”.
- GST reporting streamlined by reducing the number of BAS GST questions to three, with time and money saved set to benefit each small business an average $590 a year.
- The ATO has increased the scope of TPARs to apply not just to construction industry, but also to:
- cleaning and courier contractors from 1 July 2018, and
- security providers, road freight transporters and computer system design and services from 1 July 2019
If you have a business in any of these industries you will need to report payments to your contractors to the ATO by 28 August each year. To get ready for this, you need to ensure you are tracking payments to your contractors appropriately in your accounting software.
- The government will provide additional funding – over $133m over four years – to “increase debt collections” and improve “the timeliness of debt collections”. This means we can expect to see an even more aggressive approach taken by the ATO to late payers. HINT: don’t be late with your ATO payments in the future.
- It has also been announced that the Director Penalty Regime will be extended to apply to unpaid GST so that Directors are personally liable for the company’s debts relating to GST.
If you need help understanding any of these new measures, or getting your affairs in order to ensure your business complies with all requirements, please connect with us.
Author: Adam Galea