Governing for Growth (English)

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Federal Budget 2017-18 Review

The following points highlight key changes to the  economic landscape which could potentially affect  your business.

Company tax rates

The government has confirmed its intention to eventually reduce the company tax rate from 30 per  cent to 25 per cent for all companies. This is a step in  the right direction in keeping Australia competitive with  our international trading partners.

Despite being stymied by the Senate, we believe  the government’s original company tax cut plan is  worth supporting in full. This should form part of a comprehensive suite of measures, including more cuts  to ineffective regulations and shifting reliance from  income tax to the GST. Australia deserves a simpler,  more modern tax system that drives long-term growth  for all businesses.

The company tax rate changes are summarised in the  following table. Note that these changes are yet to be  approved by the House of Representatives.

Housing affordability

The government has also made important announcements in the Budget which aim to increase  supply in the market to address demand. Key changes  have been made to the capital gains tax (CGT)  regime, availability of voluntary super contributions for  first-home-buyers and increased regulations to non-  residents buying residential property in Australia.

Levy on foreign workers: 457 Visa

On the back of the recent move to replace the popular 457 visa, from March 2018, businesses that employ  foreign workers on certain skilled visas will be required  to pay an additional levy. The levy will be payable up front and then on an annual basis for the new  Temporary Skill Shortage visa.

It is disappointing that the additional levy and  significant associated increases in visa application  charges will add further costs to businesses that rely  on skilled overseas workers to develop and grow.

Family businesses

Of particular importance to the Thai community is the government’s support for small businesses. The budget  particularly assists family businesses with a turnover  of <$10m.

The Government continues their push for a decrease in  the business company tax rate and an increase in the  turnover threshold for small business. The decreasing  tax burden will free up funding for investment into jobs and innovation. It is important to note that if you operate a business in a family trust and distribute  profits to a company, the company is not classified  as a business and therefore the tax rate will remain at  30%.

Additionally, the write-off on depreciable items  presents a great incentive for small business to invest  in capital. This immediate $20k write-off on depreciable  items continues to 30 June 2018, with the turnover  threshold increasing from $2m to $10m turnover.

For budget highlights and industry impacts read our full report at grantthornton.com.au

Hello, my name is May Jungpakdee  and I am an Australian-born-Thai who  has recently joined the Corporate  Tax team at Grant Thornton Australia  Limited. Having studied a Bachelor of Laws (LLB); Diploma of Languages  (Advanced Mandarin) at the University  of Queensland and most recently an  Economics Course with The University of  Oxford.

At Grant Thornton we have a passion  to assist our clients grow in tandem  with their interests and values. We offer  a range of audit, tax and advisory  services with Australian offices located in Adelaide, Brisbane, Cairns, Melbourne,  Perth and Sydney.

I hope you find our Federal Budget  snapshot insightful. If you have any  queries regarding the budget and how  it may affect your business and future financial planning, please do not hesitate  to contact me.

D +61 7 3222 0426
T +61 7 3222 0200
E may.jungpakdee@au.gt.com
L https://www.linkedin.com/in/

grantthornton.com.au

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