Federal Budget 2019

Get the bottom line from our experts and find out what the 2019 Budget might mean for you.

2019 Federal Budget

The 2019 Federal Budget has been unveiled by Treasurer Josh Frydenberg and new Prime Minister Scott Morrison, and it is serving as a crucial platform for the Liberal Government’s re-election.

Key features of this year’s Budget are tax cuts and infrastructure spending. According to the Treasurer, the measures will return the budget to surplus for 2019/20 ($7.1 billion).

Here’s a quick snapshot of some of the announced changes.

  • Increasing the instant assets write-off for small business to $30,000
  • Further tax cuts for individuals
  • Increasing the age for the “work-test” providing a more flexible superannuation policy for those preparing for retirement
  • $285 million to help millions of Australians cover their rising energy bills
  • Significant investment in essential services and infrastructure.

If the Government is not re-elected, then many of the following proposals will no doubt be replaced with Labor’s own policies.

Small Business

Extension of instant asset write-off

Currently small business with a turnover less than $10 million can write-off certain assets costing less than $25,000 from January 2019 until 30 June 2020 (you can read more about the concession here).

This Budget proposes to increase the asset write-off threshold to $30,000 from 2 April 2019 until 30 June 2020. The turnover threshold is also increased to $50 million for small business.

Our advice for small business is to review your capital expenditure plans and consider whether you should bring forward expenditure before 30 June 2020 to take advantage of the increased thresholds.

Deferral of proposed private company loan changes

It has been proposed to amend the private shareholder company loan measures by one year. The Government is proposing to defer the introduction of the changes to 1 July 2020.

Broadly speaking, where a private company provides a loan to a shareholder or associate then the borrower is required to repay the amount back to the company before lodgement of the income tax return. Failure to repay the loan before this time can result in a deemed dividend, with the borrower paying tax on the amount borrowed.

To avoid paying tax on the company loan the borrower could enter into a written loan agreement over a period of 7 or 25 years.

The Government plans to scrap these current arrangements, creating a new framework for private company loans. This will have a significant impact on business cash flow requirements to meet loan repayments. Small business now have an extra year to plan for the changes and restructure current loans.

Expansion of Single Touch Payroll (STP) data collections

Single Touch Payroll (STP) will be compulsory for all business from 1 July 2019 (you can learn more about STP here).

This measure requires all employers to report payroll data in real time to the ATO through a cloud enabled software package. This data will now be used by other Commonwealth Agencies (such as Centrelink) to assist with integrity measures.

The Government will expand the use of data collected under the single touch payroll (STP) measure.

We will keep you updated in the next few months on our recommended software packages to use for STP reporting.

ABN holders

From 1 July 2021 ABN holders who have outstanding income tax obligations will be required to lodge to retain their ABN registration. In addition, ABN holders will need to provide annual confirmation of their details. Measures are enacted to target the black economy by enforcing more touchpoints with the Government.

A dedicated sham contracting unit will be established to address those employers who recklessly misrepresent an employment contract as a contracting arrangement. Greater data collection and analysis will continue to increase the ATO’s ability to detect unreported income or earnings and those avoiding their statutory employer obligations.

More funding for ATO audits and reviews

The Government is providing an additional $1 billion in funding for 2020 to 2023 to undertake reviews and investigations. The ATO will have their sights set on targeting aggressive tax planning strategies that are carried out by multinationals, large public and private groups, including trusts and high wealth individuals.

We recommend that you review your tax records to support tax positions taken in your current returns. We can assist you to ensure your tax files are in a ‘audit ready’ state.

Are you behind on superannuation or tax liabilities?

More funding and power will be given to the ATO to collect unpaid taxes and unpaid super.

Luxury car tax refunds – primary producers

For vehicles acquired on or after 1 July 2019 eligible primary producers will be entitled to claim a refund of the Luxury car tax (LCT) up to a maximum of $10,000.

LCT is a tax on cars with a GST inclusive value above the LCT threshold. Currently the partial refund of LCT is capped at $3,000.

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