The 9 May 2017 budget provided programs to improve housing affordability in Australia’s major cities, and significant investment in infrastructure projects including rail, roads and airports.
But what was in it for small business? In this, the first of a two-part series, we outline the key impacts for SMEs.
1. Small business instant asset write off
The small-business instant asset write off for assets costing less than $20,000 will be extended for another year which ends the 30 June 2018. This threshold was due to revert to $1000 on 1 July this year.
2. Tightened capital gains concessions – restricted to assets used in businesses
Amendments to the small-business capital gains tax concessions are to be made to restrict the use of the concessions to assets used in a small business or ownership interest in a small business only.
The CGT concessions are intended to give small businesses relief on the sale of their CGT assets that are connected to their business or the sale of the business as a whole.
There are to be no changes to the thresholds that allow access to the CGT concessions. The basic requirements to access these concessions remain at the $2 million or less aggregated turnover of assets less than $6 million.
3. Businesses to pay foreign workers levy
As of March 2018, the government has proposed to impose a levy on businesses that employ foreign workers on certain skilled visas. The amount of the levy is dependent on the turnover of the business; businesses with a turnover of over $10 million must pay the higher rates.
Businesses will have to make a $1200/$1800 per visa per year upfront payment for each employee on a Temporary Skill Shortage visa, and make a one-off payment of $3000/$5000 for each employee being sponsored for a Permanent Employer Nomination Schedule (subclass 186) visa or a Permanent Regional Sponsored Migration Scheme (subclass 187) visa.
4. Taxable payments reporting system – couriers and cleaners
From the 1 July 2018, the taxable payments reporting system will be extended from just the buildings and construction industry to the contractors in the courier and cleaning industries.
Under this system, the business in the relevant industries that use contractors must submit a Taxable Payments Annual report that specifies who the contractor is, the contractor’s ABN, and the total payments made to the contractor. This is designed to ensure that contractors are reporting all their taxable income.
5. GST treatment of digital currency
The treatment of digital currency such as Bitcoin in respect to GST will be brought into line with the treatment of money. Under the current GST rules, digital currency is not regarded as money and the supply of it is not a financial supply for GST. The consequence is the trading by means of digital currency results in a double GST taxation – first on the purchase of the digital currency and second on the exchange of the currency for goods and services which are subject GST.
6. Purchase of New Residential Premises
From the 1 July 2018, on the purchase of a newly constructed residential property, the purchaser will be required to remit the GST on the purchase directly to the ATO as part of the settlement. Under the current legislation the developer is required to remit the GST to the ATO as it is included in part of the purchase price of the property.
In the second instalment of this piece next week we will look at five further aspects of the 2017 budget that will have a significant impact on SMEs.
Daryl Corpe, Partner and Chairman, Ulton