Budget 2018 bulletin from bennetts tax & bas service

IN THIS ISSUE:

• The good
• The bad
• Noteworthy

Proposed and not yet legislated

The Good

Small to medium enterprises- the $20k immediate asset write off to be extended !

Addressing the skills shortage – a further $250m for the Skilling Australia Fund to help SME’s to grow their business. This could translate to a $10,000 subsidy to hire people of specific demographic and upskill or retrain.

Pensioners to have their earnings limit increased by $1,340

• Tax Bracket changes:

 Last year’s Federal Budget saw the threshold increase for the 32.5 percent tax bracket from $80,000 to $87,000. The threshold will be further raised to $90,000.

For higher income earners, the Turnbull Government plans to wipe out the 37 percent tax bracket in financial year 2024–25. This means the 32.5 percent bracket will then affect anyone earning between $41,000 and $200,000.

The Bad

• R & D Tax incentive to be capped –

The government has changed the way these offsets work. Now you need to figure out how much your R&D spend is as a percentage of your overall spending.

The offset is split into two thresholds: one is for businesses making $20 million and under, and the other is for any business earning over $20 million.

For companies over $20 million:

–          The R&D premium will tie the rate of offset to the intensity of expenditure. Four percentage points for R&D expenditure between 0–2 percent, 6.5 points for between 2–5 percent, 9 points for 5–10 percent and 12 points for 10 percent and above.

–          The maximum amount of R&D expenditure eligible for offsets will rise from $100 million to $150 million.

For companies $20 million and under:

–          The offset is a premium of 13.5 percentage points above a claimant’s company tax rate.

–          Cash refunds are capped at $4 million per year.

–          Offsets that can’t be refunded will be carried forwarded as non-refundable tax offsets.

This is a complex change, and complexity isn’t easy for small business. To be a real benefit, it needs to be easier to administer.

Noteworthy

 Moving to a digital future-

Single touch payroll becomes mandatory from 1 July for organisations with 20 or more employees, those with less than 20 employees have until 1 July 2019

No longer will SME’s be able to report to ATO via their BAS wages paid and hand written annual payment summaries – this reporting will occur via the payroll system each and every pay cycle ––forcing employers to meet their payroll obligations PAYG(W) and super etc.

It concerns me that forcing some enterprises to the digital world is a financial impost. The upside is that accurate real time information will be available for the business operator / owner – more info to follow in the coming weeks.

We have been advised by various accounting / bookkeeping software providers of the closing of licensing loopholes that some enterprises continue to use unlicensed software.

Service providers are no longer able to access ‘older versions’ of software to enable preparation of activity statements etc.

Becoming digitally compliant – if not transitioned in an orderly fashion can become expensive and stressful for all involved.

• Extension to Taxable Reporting and cash payments –

 2 stage initiative

1.0 TPAR is to be extended to

–          security and investigation services

–          road freight transport

–          computer system design and related services

From 1 July 2019 enterprises must start tracking their payments to service providers and report these payments to ATO –

2.0 Cash payments over $10,000

Simply you will need to rethink this strategy. The government will no longer allow such cash payments in an effort to stamp out tax avoidance and illegal activity.

Watch this space for more Budget 2018 updates