This year’s Federal Budget included a few key changes for business owners. Here’s what you need to know.

Instant asset write-off extended

The instant asset write-off for small businesses has been extended to 30 June 2019. If you purchase an asset that costs less than $20,000, you can write off the business portion in your 2018/19 tax return.

You can do this if:

  • Your business turns over less than $10 million per year.
  • The asset was first used or installed ready for use in the financial year you are claiming it in.

Assets you can write off include:

  • Technology (PCs, laptops, phones and printers)
  • Furniture (office desks, chairs and filing cabinets)
  • Plant and equipment (power tools, safety equipment and technical instruments)
  • Motor vehicles (cars, vans and trucks)

Simpler GST reporting

The Government has streamlined the GST reporting requirements for small businesses. The number of BAS GST questions has been reduced to three, scrapping the 20-question worksheet.

Income tax cuts

From 1 July 2018, low and middle income earners will receive a tax cut of up to $530 per year. This is step one in the Government’s three-step plan to flatten the tax system and ensure 94% of taxpayers pay a marginal rate of 32.5% or less by 2024.

Employers will need to use updated tax tables to ensure they are paying employees at the correct rate.

Black economy crackdown

The Government is cracking down on small businesses taking advantage of the black economy, such as failing to record cash sales to customers and not deducting PAYG tax on payments to contractors and employees.

Key measures include:

  • From 1 July 2019, small businesses will be banned from accepting cash payments for goods and services costing $10,000 or more. Payments will need to be paid electronically or by cheque.
  • Businesses will no longer be able to claim tax deductions for payments to their employees, such as wages where PAYG tax is withheld.
  • Deductions will be removed for payments made by businesses to contractors where the contractor does not provide an ABN and the business doesn’t withhold PAYG tax.
  • From 1 July 2018, cleaning and courier businesses will need to report to the ATO any payments made to contractors during the year.
  • From 1 July 2019, this rule will apply to businesses in security and investigation services, road freight transport and computer system design and related services.

Protecting business

To protect businesses from illegal phoenixing, the Government has proposed changes to corporations and tax laws to provide regulators with the tools they need to disrupt illegal phoenix activity.

Illegal phoenixing is when a new company is created to continue the business of a company that has been deliberately liquidated to avoid paying its debts. The impact on the economy is enormous. In 2012, the Fair Work Ombudsman and PricewaterhouseCoopers estimated the cost of illegal phoenix activity to be as much as $3.2 billion each year.