THE GOOD AND BAD NEWS FROM SCOMO
Prior to the Federal Budget 2018 being presented last Tuesday, a well-known private institution conducted a survey of 1000 business people to ascertain what each of them thought should be in the budget. In summary, a sample of the responses were:
- Further tax relief for small businesses
- Investment Incentives
- Permanent Rebates for the purchase of new capital equipment including the $20,000 asset write off
- More deductibles for small business
- Financial support for retail businesses
- Better access for business to financial products
- Better government support for the shared economy between business government and consumers
- Big Business should be made to pay their share of tax
Federal Budget 2018
It was telling that most business owners (82%) believed that the budget would not deliver positive change.
So, what did the federal budget 2018 deliver for business, what was the good and bad news and how did the budget meet the expectations of those business people surveyed?
The problem for Businesses wanting targeted tax relief from 30% down to 25%, is stuck in the Senate, without any guarantee that it will pass anytime soon.
On the plus side, the partially good news, is that business will continue to enjoy the tax break which allows them to write off up to $20,000 for eligible assets but the bad news is that this has not been made a permanent fixture (so far as is possible in politics) of the tax relief landscape.
Health care business, high tech researchers and fintech firms have benefited from various incentives and financial support that is available from the government such as the extra funding in health for genomics and other medical research and the data transfer rights for consumers to transfer data between service providers in the financial sector. However, this does not help the R and D sector where the government has slashed $2.4 billion from its incentive scheme and seems to continue the trend over recent years not to fully support this sector.
The Black Economy
The government has “cracked down” on the black economy by providing significant resources to the Tax Department to enable it to chase down rogue traders and others that “get away” with significant amounts of cash and limited cash payments to $10,000 in an endeavour to limit such activity, which can be seen as good news, although I won’t hold my breath to see if this actually works as many callers to radio stations, the day after the budget was handed down indicated that this economy will keep on keeping on in any event.
Also, the government has established a “hotline “to enable people to report cash in hand or phoenixing activity but other than disgruntled creditors of failed businesses in the latter instance, who is going to “dob in” rogue traders?
Furthermore, we will see the introduction of new phoenix legislation designed to limit this activity and make individual directors more responsible in such circumstances, which on paper sounds promising but we will need to see the detail.
GST will now apply to off shore booking sites such as Expedia and Booking.com so they can be taxed at the same rate as Australian business which is also good news but could have been extended further to other off shore activities and answer to some extent the expectations of small business about the payment tax by multinationals.
Businesses will also be pleased to see the introduction of up to $10,000 in wage subsidies for employers of some older workers which will keep those people in gainful employment.
So, if you look at the “wish list” of business set out above, SCOMO has certainly ticked some but not all the boxes.
It is disappointing that the government has not looked at the “big picture “including failing to provide for more major infrastructure projects and failing to give businesses opportunities to employ younger people who have seemed to have missed out entirely.
Of more concern is the failure to address the long-term tax and economic environment in this country, something that economists and business leader have wanted to see for some time from successive governments.
I look forward to hearing from interested stakeholders.
