Tim Lyford, Chair of Bentleys’ tax advisory group, speaks with Your Money on the impact of the 2019 Australian Federal Budget.
Tim unpacks some of the announcements made in this week’s budget, and outlines the benefits for businesses and individuals. Of course, the Government still needs to win the May election and then successfully put in place the supportive legislation before they will need to deliver on their promises.
The Government announced significant income tax cuts for low to medium income earners, which have been described as ‘time bomb’ by Your Money as it is a commitment of funds that the Government does not yet have and will need to find by 2024 to deliver.
More immediate benefit for taxpayers is likely to be delivered by the Government’s proposed cash refunds. Assuming the Government wins the election in May 2019, these refunds would take effect for low and middle income tax taxpayers as soon as June 2019, upon lodgment of their 2018-2019 tax return. Eligible individuals should consider lodging their tax returns as early as possible to receive their benefit.
Many small to medium sized enterprises (SMEs) will appreciate the tax write-offs and tax incentives announced in this budget.
The Government has proposed to increase the thresholds and timing for the instant asset write-off. Currently small businesses with a turnover less than $10 million can claim an upfront income tax deduction for certain assets costing less than $25,000 from January 2019 until the end of the 2020 financial year. The Government will increase the asset write-off threshold to $30,000 and the turnover threshold to $50 million for expenditure from 2 April 2019 until 30 June 2020. If your business was previously over the $10 million turnover threshold, but below $50 million, you should now review your capex plans and consider whether capex should be brought forward before 30 June 2020. You also need to be aware that certain assets (e.g. leased assets) are not eligible for the write-off. Property owners may consider how capex is shared with small business tenants eligible for the write-off. Asset leasing entities in groups may also need to be structured appropriately to access the new measures.
There are also various measures in the budget which aim to incentivise businesses to invest in staff and in the business itself. This budget has focused on the export market development grants (EMDG) scheme, creating a skills package and addressing seasonal workforce issues. The Government is also looking to boost the amount of apprenticeships by 80,000 over the next five years. It has proposed a doubling of incentive payments to employers to $8,000 per apprentice. Apprentices will receive $2,000 of incentives. The occupations eligible for the increased payments will be reviewed annually.
With any queries or concerns in relation to this year’s federal budget, please contact your local Bentleys advisor.
This information is of a general nature only and neither represents nor is intended to be specific advice on any particular matter. Bentleys (Australia) Pty Ltd strongly suggests that no person should act specifically on the basis of the information contained herein but should seek appropriate professional advice based on their own personal circumstances. Although we consider the sources for this material reliable, no warranty is given and no liability is accepted for any statement or opinion or for any error or omission.