Regulatory and compliance

Budget 2017: 10-Minute Guide for SMEs

While there were a few clear winners from Budget 2017/18, small business owners may feel somewhat left out in the cold. Although there were a few incentives specifically targeted for small business owners and entrepreneurs, most of the big-ticket items announced in Treasurer Scott Morrison’s second budget gave big cheers to first-home buyers, those living with disabilities and possibly, the general population in the long run.

So, pull up a chair, sip your coffee and grab a biscuit as we dissect the Budget 2017 and what it means for your small business in this 10-minute read – 5 if you skim read.

What’s In The Budget For SMEs?

1. Extension of $20,000 instant asset write-off

This tax concession, which was due to expire 30 June, will be extended for another year. This means small businesses with up to $10 million in revenue can continue to purchase assets with confidence and recoup the tax benefit. This item was pretty much high in demand in every SME's wish list, so it made sense to continue this policy. Increased spending always helps to stimulate the economy.

2. $300 million for state funding to cut red tape

Small businesses have often complained of all the bureaucracy they must deal with. As a continuation of the government’s commitment to cut red tape, $300 million will be given to states that simplify business rules and make life easier for SMEs. Dare we hope for something in the pipeline for state-based payroll taxes?

3. Corporate tax cuts to go ahead

The government will continue its plan to reduce the corporate tax rate, which was announced in last year’s budget, from 30% to 25% within 10 years. This applies to companies with aggregated turnover of $50 million or less.

4. Levy for foreign workers to train Australians

With the termination of the 457 visas for skilled foreign workers, businesses will now have to cough up to hire foreigners. Small businesses may need to pay up to $1200 per year for a foreign worker, while bigger businesses are looking at $1800 a year. The revenue from the new levy will go to a new fund called Skilling Australians Fund to train Aussies instead. Businesses in the hospitality industry may bear the biggest brunt as they use the now-abolished 457 visas heavily.

5. $100 million for advanced manufacturing & research

There’s $100 million in funding for advanced manufacturing and research, which hopefully will make a few SMEs happy. This, after the shameful exit of several big automotive names from Australia and the Turnbull government tries to revive a flailing industry.

6. Going after the “black-hole” cash economy

As part of a wider effort to hunt down tax evaders, the government is looking at extending the Taxable Payment Annual Report (TPAR) requirement to the courier and cleaning industries in 2018. These were among the industries identified with high proportion of cash transactions. The TPAR is already mandatory in construction and building industries, where all businesses must report payments to tally up the books and pinpoint undeclared tax.

Other Highlights of Budget 2017

After announcing the Coalition’s decision to classify debts to good and debt, you can bet there will be big spending on infrastructure projects. Calling Budget 2017 fair and responsible, Morrison says the budget is meant to be on surplus by 2021. So, what are the big changes coming ahead?

1. Taxes to increase through Medicare levy to fund NDIS

After much debate over the viability of the National Disability Insurance Scheme, the government has put its stamp of approval by promising to fund it fully. How? By hiking the Medicare Levy by 0.5% starting in 2019 to make up for the projected funding shortfall. This change affects every Australian taxpayer.

2. Medicare guarantee, now and forever

Malcolm Turnbull aims to right what went wrong in the recent “Medicare” brouhaha during the last election by guaranteeing the government’s commitment to Medicare. What this means is that the Coalition is planning to make it a legal guarantee by legislating the Medicare Guarantee Bill, which sets up a new Medical Guarantee Fund to pay for the Medicare Benefits Schedule and the Pharmaceutical Benefits Scheme. Rest assured, Medicare is here to stay for a long time.

3. First-home buyers get a hand in saving for a deposit

While things were quiet on negative gearing and capital gains tax discount, the budget tried to make small amends by assisting genuine first home buyers who are locked out of the market while struggling to save for a deposit. Under a new policy called The First Home Super Savers Scheme, first home buyers will be able to sacrifice their pre-tax dollars into their super from 1 July, up to $30,000 per person in total.

With this scheme, most people will be able to accelerate their savings by 30% as contributions and earnings are taxed at 15% and withdrawals are taxed at marginal rates, less 30 percentage points.

Other measures were also announced including plans to increase housing supply, a big headline of Turnbull’s plan to ease house prices. There will also be special rules imposed to curb foreign buying such as a special tax for those who keep properties vacant for more than 6 months.

4. $75 billion pegged for major infrastructure project

In a bid to spur economic growth, various projects will be rolled out, which mostly consists of building or upgrading transport links. First, there is a $5.3 billion commitment to build the Western Sydney Airport. Hurrah for home prices there!

Then, there’s the $10 billion National Rail programme that could deliver projects such as the Brisbane Metro, Tullamarine Airport Rail Link, Adelink and the Western Sydney Airport Rail Link. Another billion goes to Victorian transport links and a further $844 million is for upgrading Bruce Highway in Queensland.

5. New levy on big banks

In what is considered a popular move, big banks will have to pay a new levy. I mean, who doesn’t love it when big financial institutions have to open up their purse strings? With the exception that the levy is not passed onto their customers, this seem a good move to make the big banks give back. This levy applies to Australia’s 5 biggest banks, excluding insurance companies and super funds.

That’s all folks. Tell us, what did you think of Budget 2017? Did it help your small business?