The 2019-20 Federal Budget was announced this week, with the Coalition Government’s plans to build a stronger economy and a secure future for all Australians. From the individual taxpayer to small business owners or those who are self-employed, the announced budget changes will affect almost everyone across the board. Here are a few of the proposed changes that will have the greatest impact on Australian small business owners.
Low- and middle-income tax offset
The government aims to provide personal tax relief with significant changes to the low- and middle-income tax offset. The proposed changes would see the tax rate for those earning $45,001-$200,000 reduced to just 30%. At present the tax bracket for this income bracket ranges from 32.5% to 37%.
More than 10 million Australians would benefit from the offset after 1 July 2019, when they lodge their tax returns.
Instant asset write-off
There are also changes proposed to the instant asset write-off scheme, which currently sees businesses with a turnover of less than $10 million, eligible for a $25,000 threshold.
The government will look to increase the instant asset write-off to $30,000 until 30 June 2020 and expand access to SMEs with a turnover of less than $50 million. The threshold applies on a per asset basis, allowing eligible businesses to instantly write off multiple assets.
This is a huge change that will give more than 22,000 additional business access to the instant asset write-off. Currently, more than 350,000 businesses have already taken advantage of this scheme.
Single Touch Payroll
By now, we are all aware that Single Touch Payroll is here, and here to stay. Businesses with 20 or more employees were required to start reporting using Single Touch Payroll last year, and those with 19 or fewer employees need to be compliant as of 1 July 2019.
While at present, Single Touch Payroll is focussed on reporting wage, tax and super information, the budget suggests it will expand STP to include information about gross pay amounts and other details. These changes are designed to ultimately reduce the compliance burden for employers and individuals.
Read more about Single Touch Payroll here.
It’s important to note that these changes will only come into effect if the Coalition government is re-elected and has the support in the Senate. Keep your eye out on Labor’s budget reply and the imminent federal election for more announcements affecting small business.