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2018

FEDERAL BUDGET

An honest Budget for Australia’s workforce

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On Tuesday, 8 May 2018 the Federal Treasurer, Mr Scott Morrison, handed down his third Federal Budget. The purpose of this year’s Budget was to provide some tax relief to small and medium income earners as well as introduce tax reform should the Government be re-elected.

Our Federal Budget Alert provides a succinct summary of the announcements related to personal and business taxation, tax compliance and superannuation.

"As expected this Budget is built around personal tax cuts targeted at low and middle income earners, while offering little for SME businesses apart from a further 12 month extension of the $20,000 instant asset write-off, which will certainly be welcome.

There have been no changes to the rules for work-related expenses, which will continue to be subject to even rigorous ATO compliance activity."

Peter Bembrick, Tax Consulting Partner in Sydney

“Good to see the Government supporting retirees with small superannuation balances. The removal of the work test for a year and allowing further contributions to superannuation will be of benefit to those currently on the age pension who may still work limited hours. The requirement for Trustees of superannuation funds to offer more choice of income streams to their members will further support those retirees who need it most.”

Mitchell Markwick, Superannuation Partner in Wollongong

“There have been changes to the R&D Tax Incentive from 1 July 2018. For entities that can get a tax refund this amount has been reduced to coincide with the decrease of our tax rate. The 43.5% refund is going to be reduced to 41% for the 30 June 2019 tax year. Also refunds capped at $4m remainder to be carried forward as a tax offset. For those entities with aggregated turnover over $20m it has become more complicated and the R&D Tax Incentive will depend on R&D spend to the percentage of other expenditure. More guidance, anti avoidance provisions and transparency will be in the cards. More to come stay tuned

Mariana von-Lucken, Tax Consulting Partner in Sydney

“If this is an election Budget perhaps we should have them more often! Tax cuts in the next tax year of up to $1,060 per family, an extension to the SME instant tax write off for equipment valued at less than $20,000 and the promise of simplification and reduction of tax rates for all individual taxpayers over several years should result in families having more money in their pockets to reduce personal debt and inject money into the economy.”

Steven Toth, Tax Consulting Partner in Adelaide

“With the lowest anticipated deficit in more than a decade, there is a little bit in the Budget for most. Targeted tax relief, funding for security measures, infrastructure funding for WA projects in both regional and metro areas and additional funding for health services should mean that on the whole this Budget is one that many will be pleased with.”

Norman Neill, Managing Partner in Perth

“Whilst there were no new significant taxes against foreign investors in this Budget unlike trends of recent past, there was a missed opportunity to provide targeted tax concessions for foreign investors to assist build and fund Australia’s infrastructure and housing stock.”

Josh Chye, Tax Consulting Partner in Melbourne

“The tax cuts come as no surprise however it is definitely a Budget with an eye on the next election. It’s a 7 year plan that addresses bracket creep by eventually removing the 37% tax bracket. Interesting is the move to address the “Everett” assignments by removing the availability of the small business CGT concessions."

Daryl Jones, Tax Consulting Director in Brisbane

"This year’s Budget focuses on providing greater benefits for small businesses, middle and low income earners who are still going through hard times. We will need to wait and see what impact it has in terms of growth for our economy."

Litsa Christodulou, Business Advisory Services Partner in Perth

"A pre-election Budget ‘headlining’ post-election income tax relief for low and middle income earners. Continuing support for SMEs is welcome. Tax systems are about fairness, efficiency and simplicity. The Budget appears to makes some progress here but, again, does little in the way of real tax reform."

Guy Brandon, Tax Consulting Partner in Perth

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