Federal Budget 2018-19 - What It Means For Small Business
$20,000 instant asset write-off scheme extended
The small business $20,000 instant asset write-off scheme is extended for another year. If you’re a small business owner, you can claim any business plant and equipment if you buy it in the 2018–19 financial year. However, the business plat or equipment item must be installed and ready for use within the financial year. This extension allows your business to be clear about whether or not it can afford such an expense.
Additional funding for Single Touch Payroll to assist small businesses
The Government will provide an addition $15 million over 3 years from the 2018-19 income year to the ATO to support the modernisation of payroll and superannuation fund reporting. The funding will be used to support small businesses with fewer than 20 employees during the transition to Single Touch Payroll Reporting from 1 July 2019.
Deductions disallowed for holding vacant land
The Government will disallow deductions for expenses associated with holding vacant land. Where the land is not genuinely held for the purpose of earning assessable income, expenses such as interest costs will be denied. It is hoped this measure will reduce the tax incentives for land banking which limit the use of land for housing or other development.
The measure will apply to both land held for residential and commercial purposes. However, the "carrying on a business" test would generally exclude land held for a commercial development. It will not apply to expenses associated with holding land that are incurred after: a property has been constructed on the land, it has received approval to be occupied and available for rent; or the land is being used by the owner to carry on a business, including a business of primary production.
Disallowed deductions will not be able to be carried forward for use in later income years. Expenses for which deductions will be denied could be included in the cost base if it would ordinarily be a cost base element (ie borrowing costs and council rates) for CGT purposes. However, if the denied deductions are for expenses would not ordinarily be a cost base element, they cannot be included in the cost base.
The 2018–19 Federal Budget Checklist
- Make sure your accounting software is updated to the latest tax tables. The big personal tax cuts start on 1 July 2018, so get ready.
- Make sure your employee details are correct.
- Start planning for whether you intend to spend money to claim the instant asset write-off benefit in 2018–19.
- For businesses claiming R&D, speak with us making sure your documentation and reporting are sufficient to prove your R&D spend compared to total expenditure.
- For new industries falling under the mandatory taxable payments reporting scheme, make sure you are on the latest version of your software and enable taxable reporting.
Sources:
Chartered Accountants, Thomson Reuters (2018) Federal Budget: Tax Bulletin 2018-2019
https://www.charteredaccountantsanz.com/news-and-analysis/news/2018-19-australia-budget
MYOB (2018) Explained: Federal Budget 2018
https://www.myob.com/au/blog/federal-budget-2018-explained-for-your-business
TaxBanter (2018) Federal Budget 2018-19
www.taxbanter.com.au