There are a few nice-to-haves in this year's Budget, however, it failed to ignite much excitement from start-ups despite the Government's earlier pledges on innovation and entrepreneurialship.
Extended until 30 June 2018
The $20,000* immediate deduction threshold for assets purchased by businesses with an aggregated turnover of under $10 million will be extended until 30 June 2018.
Assets will need to be used or installed ready for use by 30 June 2018 to qualify for the higher threshold. The instant asset write-off only applies to certain depreciable assets. There are some assets, like horticultural plants, capital works (building construction costs etc.), assets leased to another party on a depreciating asset lease, etc., that don't qualify.
Assets costing $20,000 or more can be allocated to a pool and depreciated at a rate of 15% in the first year and 30% for each year thereafter. If the closing balance of the pool, adjusted for current year depreciation deductions (ie, these are added back), is less than $20,000 at 30 June 2018 then the remaining pool balance can be written off as well.
The current 'lockout' laws for the simplified depreciation rules (these prevent small businesses from re-entering the simplified depreciation regime for five years if they opt out) will continue to be suspended until 30 June 2018.
From 1 July 2018, the immediate deductibility threshold will revert back to $1,000.
* $20,000 exclusive of GST for GST registered businesses. $20,000 inclusive of GST for businesses not registered for GST.
Date of effect 1 July 2017
The small business CGT concessions will be tightened to ensure that the concessions can only be accessed in relation to assets used in a small business or ownership interests in a small business.
The Government is concerned that some taxpayers are accessing the concessions for assets which are unrelated to their small business, for instance through arranging their affairs so that their ownership interests in larger businesses do not count towards the tests for determining eligibility for the concessions.
The small business CGT concessions will continue to be available to small business taxpayers with aggregated turnover of less than $2 million or business assets less than $6 million. The higher small business entity turnover threshold of $10 million will not apply to these concessions.
Date of effect 1 July 2017
Australia's Top 5 major financial institutions are to be hit with a major bank levy, which will be imposed on Authorised Deposit-taking Institutions (ADIs) with licenced entity liabilities of at least $100 billion. The levy is expected to raise around $6.2 billion over 4 years.
Customer deposits of less than $250,000 and additional capital requirements imposed on the banks by regulatory authorities are excluded from their assessed liabilities for the levy.
To prevent financial institutions affected by the changes from simply increasing interest rates on mortgages to fund the levy, the Australian Competition and Consumer Commission (ACCC) will undertake a residential mortgage pricing inquiry until 30 June 2018. The ACCC will be able to require relevant ADIs to explain changes or proposed changes to residential mortgage pricing, including changes to fees, charges, or interest rates by those ADIs.
Date of effect March 2018
Businesses that employ foreign workers on certain skilled visas will pay a levy that will be channeled into the Skilling Australians Fund. The new levies replace and increase the existing training benchmark financial obligations, generating an estimated gain of $1.2 billion over 4 years.
So what does this look for your business?
Date of effect 1 July 2018
Under new integrity measures, property developers will no longer manage the GST on sales of newly constructed residential properties or new subdivisions. Instead, the Government will require purchasers to remit the GST directly to the ATO as part of the settlement process.
It seems that under current law (where the GST is included in the purchase price and the developer remits the GST to the ATO), some developers are failing to remit the GST to the ATO despite having claimed GST credits on their construction costs.
The Government expects that as most purchasers use conveyancing services to complete their purchase, they should experience minimal practical impact from these changes.
The practical effect for developers is that they will not have the GST they would have collected to assist with cash flow between the period between settlement and when they would normally remit it to the ATO.
Many new residential properties and subdivided lots are sold under the GST margin scheme which allows the developer to calculate the GST based on the difference between their purchase price and sale price rather than GST applying to the full sale proceeds. It is not clear how this will work under the proposed new rules and whether the purchaser will be able to rely on calculations performed by the developer to meet their obligations with the ATO.
Date of effect From 2017-18
Indexation will be reintroduced for elements of the Medicare Benefits Schedule:
- Bulk-billing incentives for General Practitioners will be indexed from 1 July 2017;
- Standard consultations by General Practitioners and specialist attendances will be indexed from 1 July 2018; and
- Specialist procedures and allied health services will be indexed from 1 July 2019.
In addition, from 1 July 2020, indexation will be introduced for certain diagnostic imaging items on the MBS, including for computed tomography scans, mammography, fluoroscopy and interventional radiology.
This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.