- COMPANIES turning over up to $10 million will have taxes cut from 30 per cent to 27.5 per cent from July 1. This is expected to benefit 870,000 Australian businesses to allow greater investment in their business.
- UNINCORPORATED businesses turning over less than $5 million will receive an 8 per cent tax discount from July, up from the existing 5 per cent discount, with a continued cap of $1000. The discount will increase annually to 16 per cent in 2026 and is estimated to benefit 2.3 million unincorporated small businesses.
- THE 27.5 per cent company tax rate will be accessible by more companies over time: those turning over up to $25 million will gain access in 2017-18, up to $50 million from 2018-19 and $100 million in 2019-20. This will increase until 2023-24, and the company tax rate will be cut to 25 per cent in 2026-27.
- THE final year of the $20,000 instant asset tax write-off – which has been of significant support for builders – will be expanded from businesses earning up to $2 million to those earning up to $10 million a year. This will allow businesses to instantly write off the cost of business assets rather than spreading the cost over a number of years.
- A SHIFT in the second-highest tax threshold from $80,000 to $87,000 will see some relief for many taxpayers.
OTHER BUSINESS MEASURES
- A COMMITMENT has been made to developing simplified GST (BAS) reporting for businesses turning over less than $10 million.
- A CHANGE to the small business threshold opens up PAYG instalments for businesses turning over less than $10 million.
- ADDITIONAL funding of $16.3 million over four years will be provided to the office of the Small Business and Family Enterprise Ombudsman to assist with broader inquiries and advocacy.
- AUSTRALIAN Taxation Office to investigate electronic invoicing for potential rollout in 2017. The measure is aimed at cutting manual processing by businesses.
- FUNDS have been set aside to continue the joint police taskforce into matters arising from the Royal Commission into Trade Union Governance and Corruption. The taskforce will continue until the end of this calendar year.
- NO changes to negative gearing, ensuring no massive changes to property valuations and key valuation drivers.
- CHANGES to Division 7A tax arrangements relating to loans and debt forgiveness between companies and shareholders will aim to cut tax avoidance but may cause short-term concerns for family and small companies. The changes are based on a review conducted by the Board of Taxation and will come into effect July 1, 2018.
- CHANGES to superannuation laws will force a substantial rethink for business owners hoping to transfer the sale of a business into their retirement nest-egg.
SUPPORT FOR YOUTH JOBS
- BUSINESSES to receive cash bonuses for offering internships or jobs for young job seekers. Beginning April 2017, businesses will receive an up-front payment of $1000 for a 4-12 week internship (up to 30,000 will be offered).
- EMPLOYERS hiring job-seekers from January 2017 will receive a wage subsidy of between $6500 and $10,000 under the program. In the words of Treasurer Scott Morrison, this will lead to “real work experience with real employers that leads to real jobs”.
OTHER MEASURES AND INFRASTRUCTURE
- ADDITIONAL funding of $3.4 million over two years to the Asbestos Safety and Eradication Agency to coordinate the National Strategic Plan for Asbestos Management and Awareness 2014-2018 for a national approach to asbestos management and awareness in Australia.
- CONTINUED funding of the Torrens to Torrens and Darlington Interchange roads projects.
- A COMMITMENT to 12 Future Submarines to be built in Adelaide, which is likely to provide future demand for South Australia’s housing and commercial sectors.
- THE Federal Deficit estimated to remain around $37.1 billion for 2016-17 (about 2.2 per cent of GDP) before reducing to $6 billion in 2019-20 (0.3 per cent of GDP).
- REAL GDP tp grow at 2.5 per cent through 2016-17, 3 per cent from 2017-18.
- LOW employment growth is expected to continue over the next four years: 1.75 per cent in 2016-17 and 2017-18, falling to 1.25 per cent in 2018-19 and 1.5 per cent in 2019-20.
- UNEMPLOYMENT rate estimated to settle at 5.5 per cent.
- PRICE growth is expected to remain low: 2 per cent in 2016-17, 2.25 per cent in the year following, and 2.5 per cent thereafter. This puts it at the lower end of the Reserve Bank’s target range, increasing pressure for more rates cuts.
- WAGE growth is expected to remain at 2.5 per cent in 2016-17, before increasing over coming years to 3.5 per cent in 2019-20.
- BUDGET revenues to be driven by rising company profits and income tax – despite the outlook for wage growth being low. Commentators have noted that companies will find it difficult to boost prices in such an environment.
- NO Budget measures target productivity growth.
- DWELLING investment is forecast to reach 8 per cent annual growth in 2015-16 before tailing off to 2 per cent growth in 2016-17 and 1 per cent growth in 2017-18.
- TAX cuts are dependent upon support of successive Governments and remain uncompetitive against larger economies. For example, the corporate tax rate in the United Kingdom is currently 20 per cent, falling to 17 per cent from 2020.