Deciphering the federal budget papers can be an arduous task. There’s thousands and thousands of budget items to look at and numbers to crunch (and that’s before you get to reading between the lines of all the ministerial press releases).
But the national accounts are a rich resource for anyone interested in the Australian economy and what’s in store for us in coming years.
Here’s our quick guide to seven more budget changes you should know about.
It was no secret that this year’s federal budget would contain personal income tax cuts for most Australians.
On Tuesday, Treasurer Scott Morrison outlined three steps to a seven-year-long plan.
The first step is immediate tax cuts for middle and low income earners in the form of a non-refundable tax offset of up to $530 per year. The offset will be available for four years, between 2018-19 and 2021-22, and will be given back to taxpayers after they lodge their tax returns.
For those earning $37,000 or less, the offset will be up to $200. For those earning between $37,000 and $48,000, the offset will increase by three cents per dollar to a maximum of $530, and those earning up to $90,000 will be eligible for the full $530. Above that income level, the offset will be phased out at a rate of 1.5 cents per dollar.
The second step in the plan is to guard against income tax bracket creep by increasing the threshold of the 32.5% tax bracket from $87,000 to $90,000, from July 1, 2018. The low income tax offset from step one will then be increased from July 2022 and the 19% income tax bracket increased to $41,000.
From July 2022, the 32.5% income tax bracket will again increase, from $90,000 to $120,000.
In the third step of the plan, the government will remove the 37% income tax bracket in a bid to simplify the tax system. At the end of the government’s seven-year plan, Australians earning more than $41,000 a year will be left with just two income tax brackets: 32.5% for incomes between $41,001 and $200,000, and 45% for incomes exceeding $200,000.
In this year’s federal budget, the government has unveiled its ‘Australian Technology and Science Growth Plan’, which includes $20 million over four years to establish a new Small and Medium Enterprises Export Hubs program.
There is little detail in the budget papers about the hubs; however, the government said they will “enable cooperation and boost export capability of local and regional businesses, through support to develop collective brand, leveraging local infrastructure to scale business operations, and positioning regional businesses to participate in global supply chains”.
In a change that will likely bring a smile to local accommodation booking services, the government has announced a plan to recoup $15 million by making offshore online booking providers calculate their GST turnover in the same way as local businesses.
The measure will come into effect from July 1, 2019, and apply to sales made on or after that date, as long as all the states and territories agree.
The current system exempts offshore sellers from including sales of hotel accommodation in their GST turnover, which means they don’t necessarily need to register for and charge GST on mark-ups of whole accommodation prices.
“Removing the exemption will level the playing field by ensuring the same tax treatment of Australian hotel accommodation, whether booked through a domestic or offshore company,” the government said in the budget papers.
Are you considering changing superannuation funds? From July 1, 2019, the government plans to ban exit fees on all superannuation funds.
There will also be a 3% annual cap on passive fees charged by superannuation funds for accounts with balances under $6000.
All inactive superannuation accounts with balances below $6000 will also be transferred to the Australian Tax Office, which will then use data matching processes to locate the owners of those accounts and return them.
Combined, these measures are estimated to deliver a budget gain of $166.6 million in fiscal balance terms over the forward estimates.
In the 2017-18 mid-year budget update the government established a Small Business Digital Taskforce, and on Tuesday night, it allocated $500,000 to develop a response to the taskforce’s findings.
The response will be led by Mark Bouris.
Established in the 2017 federal budget, the Skilling Australians fund promised to match funding with the states and territories to fund $1.5 billion in traineeships and apprenticeships for “high-demand” areas over four years.
The program would be funded by a levy on employers that take on workers on temporary skilled migration programs, but for it to go ahead, each of the states and territories needed to sign up.
That didn’t happen prior to this year’s budget and so the federal government is now proposing to revise the implementation plans for the fund. According to the budget papers, the state and territory governments will now be offered a new agreement, estimated to provide $1.2 billion over four years. The agreement will be based on the current levy amounts, plus an extra $50 million over the four years on a per capita basis to provide more certainty.
Finally, Australian small businesses could soon be facing a new regulatory framework for Australian Business Numbers.
The government says it will consult on and design the new framework in 2018-19.
While the government has not hinted at what a new system would look like, it says the review is based on a recommendation from the Black Economy Taskforce to “provide improved confidence in the identity and legitimacy of Australian businesses”.
NOW READ: Here’s what small businesses wanted from Budget 2018
Editor
Eloise is an experienced business journalist and editor, who has held senior editorial roles at SmartCompany since 2014. Prior to joining SmartCompany, Eloise was news editor at Books+Publishing, the trade press for the Australian book industry. Eloise has degrees in media and communications, marketing and business management, and political science. You can follow her on LinkedIn, and Twitter at @ellykeating.
Comments