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Seven need-to-knows from the Budget for your small business

The 2018 Federal Budget focussed on tax cuts, infrastructure building and initiatives to help SMEs grow.
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Seven need-to-knows from the Budget for your small business

Seven need-to-knows from the Budget for your small business

11 May 2018

The 2018 Federal Budget focussed on tax cuts, infrastructure building and initiatives to help SMEs grow. While the return-to-surplus push is commendable, more needs to be done to support small businesses, the backbone of the nation’s economy.

If you read nothing else about the Budget, here are seven key things you need to know about for your small business - focussing on the good news.

The $20,000 instant asset write-off rides again

To support the financial ability of small business owners to keep their technology and equipment current, the $20,000 instant asset write-off has once more been extended. The higher threshold for simplified depreciation was introduced in 2015 as a one-year initiative for companies with less than $10 million turnover. It has thus far been extended for 12 months in every subsequent budget and, given its dual benefit of enabling small businesses to invest in the latest equipment and injecting cash into the economy, there are strong arguments to make it permanent. For now, you have until June 30, 2019 to access the instant write-off. Find out more about how it works and what is and is not eligible here.

All hail the simplified BAS

Around 2.7 million small businesses will be delighted to see at least one tangle of red tape vapourising before their eyes with the confirmation that the number of GST questions is reduced from 20 to three on the BAS worksheet. Streamlined GST reporting is estimated $590 per year when fully implemented (with the possible exception of the accountants who will lose the business of completing the old-style rigmarole for their clients!).

Tax cuts make the business grow round

The tax cuts aren’t perfect and it seems unlikely that the Federal Government’s commitment to broader company tax cuts will pass through the Senate in their current form. But the good news is that the ongoing 10-Year Enterprise Tax Plan means that the turnover threshold for a small business has been extended from $2 million to $10 million from July 1 this year, and businesses with a turnover less than $50 million will have their tax rate cut to 25.7%. The new tax offset relief for low and middle-income earners (which in addition to the current low-income tax offset is worth up to $530. Over the next four years, personal tax cuts could amount to $13.4 billion - and we know that putting more money in the pockets of hard-working Australians will in turn flow through our economy.

Boo hiss to the black economy

The very fact that you’re receiving this email shows that you’re as cranky about the cash economy as the next upstanding citizen. While you’re doing the right thing, it’s frustrating to see many operating in the black economy and getting away with it. We don’t think enough has been done to crack down but, in the wake of the Black Economy Taskforce Final Report, this Budget has several measures to help. They include preventing businesses that fail to meet tax obligations from tendering for government contracts, introducing a nationwide cash-payment limit of $10,000, and giving more power to authorities to detect and disrupt those cashed-up tax dodgers.

International ambition

There’s a whole new world of export opportunity for Australia through the surging tide of eCommerce, and the confirmation of $20 million investment in SME Export Hubs is good news for small business. These hubs will help businesses collaborate with each other and identify new global markets. Whether or not you head for a hub, it’s a reminder that you absolutely should be thinking about the potential for your small business to sell to the world.

Smarter for longer

We applaud the range of training support initiatives in the Budget, which will both unlock innovation to create more jobs and show older Australians pathways to continue their careers. There’s $17.7 million in additional funding for the Entrepreneurship Facilitators program, with a special focus on those aged over 45 years. It will also extend to new and regional locations, turning experience and ideas into business opportunities. There’s a similar amount to establish the Skills Checkpoint for Older Workers program, supporting those aged 45-70 to get advice on retraining or transitioning into new roles, aimed at helping them to remain in the workforce for longer.

The NSW bypass

In this Federal Budget the state of NSW did not receive the largesse of other states that have invested less in their own infrastructure development and maintenance. On the bright side, improving roads and ports will help small businesses to operate, and create jobs. The projects that fall within NSW include the $971 million for the Pacific Highway Coffs Harbour bypass, the $155 million for the Nowra Bridge and the $400 million Port Botany rail line duplication, which should make getting goods out of Australia easier for exporters.

A craft toast - and a crackdown

As previously announced, the Government will reduce draught beer excise saving a modest $85 million on the cost of beer over four years. The detail of this measure is great news for craft breweries and distilleries, who have been lobbying for a change to tax laws that meant small brewers paid a higher level of tax on their smaller kegs. Not such good news for illicit tobacco sellers though: the Budget announced a funding boost to crack down on the black-market tobacco trade, aimed at keeping tobacco sales in fully taxed and proper channels, and recouping a projected $3.6bn in revenue.

While the above changes were outlined in the Federal Budget, they are yet to be passed into law. As always, we advise you to seek professional tax advice specific to your own small business before making any decision based on this general information.

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