The budget and SMEs: what’s pending from last time and what to watch this year

As we approach the release of the federal budget on 2 April, it’s worth noting that the proposals unveiled will be just that: proposals. Some will hit snags in Parliament, some may be rewritten, and some could be scrapped if government changes hands. With that caveat in mind, here are some bills from the 2018-19 budget that are still awaiting passage, and a few that have recently become law and apply to small business as soon as April.

Unfinished

A less generous R&D tax break

Bill status: Before the Senate

In last year’s budget, lawmakers sought tighter rules for claiming a tax break on R&D. Ventures with annual revenue of under $20 million – nearly all small businesses – would find their R&D cash refund capped at $4 million. While the R&D tax break is not widely used by most small businesses, this is a clear indicator that policymakers are looking to curb this tax concession in future years. Start-ups such as biotechs and cloud or enterprise-focused software companies could bump up against this cap in their early non-revenue generating years as they build a product that matches the market’s needs.

Amnesty to correct lax superannuation practices

Bill status: Before the Senate

Many businesses fail to regularly contribute at least 9.5 per cent of their workers’ earnings to superannuation , sometimes because of poor cashflow. The Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2018 promised a one-off 12-month amnesty for employers to fix their mistakes. But there’s little chance of the bill passing before an election is called, Peter Burgess, SuperConcepts general manager of technical services and education, told SMSFAdviser last month.

Capital gains tax for expats who sell their Australian home

Bill status: Before the Senate

Australians have long enjoyed an exemption from capital gains tax when they sell their primary residence or family home. But a “housing affordability” measure in last year’s budget, aimed at foreign investors, threatens to remove that tax break for many Australian citizens too. Any Australian taxpayer who happens to be living overseas when they sell their family home would have to pay tax on the capital gain under the 2018 proposal. There are an estimated 100,000 Australians living and working abroad, and many of them have raised their voice in opposition to the “draconian” change.

Finished

Single Touch Payroll required of all businesses

Bill status: Assent. Becomes law on 1 July

STP is an ATO initiative that requires employers to report salaries and wages, PAYG withholding, and superannuation, every time they pay their workers – not just quarterly or yearly. Practically speaking, this means all businesses will need to send the details to the ATO when they make payments to staff using software such as Xero Payroll. It will mean a change in work habits for many small employers who may be used to putting off payroll record-keeping well past payday.

Harsher penalties for employers that shirk superannuation duties

Bill status: Assent. Penalty provisions take effect 1 April 2019

How serious is the ATO about making employers pay superannuation? Serious enough to seek jail time for those that fall badly afoul of the rules. From next month the ATO will have expanded powers to pursue criminal penalties for serious violations of superannuation obligations, including potential time behind bars for individual employers or directors (including a trustee company), according to KHQ lawyer Jack Stuck, writing in a Walters Kluwer analysis.

Previously the law only allowed the ATO to fine employers who failed to pay their workers’ super on time and in full.

Angus Capel, Small Business Advocate, Xero

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