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.
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.
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.
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