Mirror, mirror on the wall, what does Budget 2018 hold for us all?
01 May 2018
With the next federal budget just one week away, BDO Tax Partner Mark Molesworth said it’s likely that many of the government’s proposed measures have been pre-announced. These include:
- The implementation of personal tax cuts, and the abandonment of any increase in the Medicare levy. It is likely that the tax cuts will be aimed at lower income earners and will mostly take effect in the future (rather than immediately)
- Changes to the research & development tax incentive program to focus on R&D intensity and potentially other measures to rein in the rate of government expenditure in this area. Or to refocus it on areas of greatest benefit, if you believe the government
- A commitment to infrastructure spending
- A commitment to returning the budget to surplus in 2021 and commencing to pay down debt.
Mr Molesworth predicts the budget will feature outcomes from the black economy taskforce recommendations “I think we can expect a crackdown on the cash economy by putting greater obligations on those doing the right thing.”
Changes to the tax system badged as ‘integrity measures’ are expected, to ensure a smooth passage through parliament. “Unfortunately, while some of these will truly be integrity measures, some will represent changes to the policy of the underlying legislation. I expect some sort of removal of work-related deductions in this category,” Mr Molesworth said.
“I’m also expecting another round of measures to crackdown on any sector who appears to be lacking defences at the moment. In prior years this has included foreign residents, multinational businesses and the top five banks. Perhaps the financial planning sector can expect some attention this year?”
“I expect that the headline-grabbing measures will be about the government spending on individual tax cuts (for some period in the future), corporate tax cuts (in the future) and infrastructure spending (in the future). But while number crunchers are working out whether the tax cuts will be equivalent to more or less than a sandwich and milkshake per week, spare a thought for hard working business people. Their businesses will be the ones that have to comply with a new round of ‘integrity measures’ – even though most of them are not the targets,” he concluded.