Sugar Hits & Small Business Wins Signalled for Budget Night
25 March 2019
BDO Australia has signalled electorate sweeteners and small business wins are on the cards as the Treasurer prepares to deliver next week’s Federal Budget.
Mark Molesworth, BDO Tax Partner and Federal Budget commentator said: “It’s likely that the circa 1$9 Billion forward estimates cost set aside in the Federal Government’s Mid-Year Economic and Fiscal Outlook (MYEFO) announced in December, signal some significant personal income tax cuts or one off payments to welfare recipients.”
“Rather than giving one-off sugar hits to the electorate, it would be better if the government focussed on structural changes to the tax system to make the Australian economy more competitive in the long run. Although sensible changes to the income tax rates should be included as part of any true structural change,” he said.
“Other structural changes should include:
- the reduction of dead weight cost taxes on business - such as transfer duties and payroll tax
- measures to reduce complexity - such as in the FBT system
- changes that will incentivise increased productivity and efficiency in the economy.”
Scott Morrison has already announced the extension to the Instant Asset Write-off until 30 June 2020, and increased it from $20,000 to $25,000.
But a survey undertaken in November last year, with 864 small businesses (published by American Express) showed almost half (47%) are unaware they’re able to write off a purchased asset worth $20,000 or less in their tax return for that financial year. Further, only 52% of the businesses surveyed that are aware of the scheme say they’ve actually claimed the deduction.
Mark said: “Tax cuts and incentives are always welcome for small business. Whilst the Instant Asset Write-off was introduced with a deadline to encourage immediate expenditure and to provide stimulus to the economy, the annual extension of this initiative has diluted the impact of the measure.
“BDO would encourage the Government to provide long term incentives as opposed to uncertain year on year extensions. This will allow SMEs to plan large asset purchases without imposing artificial deadlines.”
“It would also be a big win if assistance was given for small and micro businesses to transition to single touch payroll.”
1 View graph: Appendix A: Policy decisions taken since the 2018-19 Budget
BDO will keep you updated on developments leading into the 2019-20 Federal Budget.
Federal Budget 2019