Budget 2017: Good on infrastructure but relies on taxing
10th May 2017 | News
The Commonwealth Treasurer, Scott Morrison, delivered his second Budget in Canberra on Tuesday, 9 May 2017.
The Budget is the Government’s annual financial statement and review of levels of taxation. It also includes the Government’s future financial strategy and economic forecast, as well as the social and political priorities and how the Government intends to achieve these.
In this announcement, the Budget was one of infrastructure, housing incentives, tax hits and bank levies. The Government has declared its backing for small business and investing in future growth with funding for major infrastructure projects.
In addition, taxes on foreign workers were a sting for business. Some economic experts say it’s practicable, others argue it relied on tax increase again.
Overall, small business has fared reasonably well, while the banks have not.
The key points announced in this Budget that will affect small businesses were:
- Tax cuts for small business with instant write-off expenditure for $20,000, extended for one more year with business turnover under $10 million.
- Small business capital gains tax (CGT) to be tightened for assets not connected to small business.
- CGT discount will be increased from 50% to 60% for affordable housing to promote cheaper housing from 1 January 2018.
- The taxable payment reporting system will be extended to cleaning and courier contractors to target cash industries.
- Plant and equipment depreciated for a rental property will now be limited to the original owner. Subsequent owners will not be able to claim it.
- Improve the integrity of negative gearing by disallowing deductions for travel expenses from 1 July 2017.
Other important measures from the Budget were:
- Increase Medicare levy by 0.5% from 2% to 2.5% for every Australian earning over $21,655. This is expected to raise $8.2 billion over four years and will be effective from 1 July 2019.
- The threshold for paying back higher education fees will change to $42,000 from the current $51,957 threshold.
- Tax on the biggest banks, as they will pay a new levy of 0.06% raising $6.2 billion over four years.
- Increase in capital gains tax discount from 50% to 60% for residents who choose to invest in affordable housing.
In summary, the Budget aims to maintain Australia’s AAA credit rating, but leaves business a bit empty.
Should any of this affect you and your business, contact one of our TaxAssist Accountants today.