With the 2019 Election now behind us and the LNP retaining control of the Government after what many commentators are calling a ‘miracle’ result for Scott Morrison and his team, it might be of interest to you to know a couple of the changes that could affect your business planning.
ABC reports that by 11 am today, being the first day of trading after the election, that the ASX 200 had hit its highest level since late 2007, an 11 year high. The increase is value was underpinned by the performance of the big four banks and private health insurers and could push higher. A positive reaction to the result of the market, but what are the policies that affect Australian small and medium businesses?
There are two areas that were revealed in the recent budget announcement. The main recent change which is active now is the Instant Asset Write Off. There are also promised tax cuts that will take effect over the next two-three years.
Instant Asset Write Off
During the Government’s 2018-19 Federal Budget announcement for the asset write-off has been increased from $25,000 to $30,000 (per asset) and expanded to businesses up to $50 million in turnover (previously limited to businesses up to $10 million in turnover).^
This means eligible businesses:
With a turnover of up to $50 million, will be able to write-off the asset value of new and used equipment costing $30,000 or less, if it is acquired and installed for use from 2 April 2019 and 30 June 2020. Effective immediately and includes businesses with a turnover of up to $50 million.
With a turnover of $10 million, will be able to write-off the asset value of new and used equipment costing $25,000 or less, if it was acquired and installed for use between 29 January and 1 April 2019.* *Yet to be legislated.
With a turnover of $10 million, will be able to write-off the asset value of new and used equipment costing $20,000 or less, if it was acquired and installed for use between 1 July 2016 and 29 January 2019.
For businesses with a turnover of less than $50 million, the tax rate has already been reduced from 30% to 27.5%. This will be decreased to a 25% tax rate by 2021-22 (still a way off).
For unincorporated small business tax discount rate, the rising discount has been brought forward, rising from 8% currently to 13% in 2020-21 and 16% from 2021.
Personal tax rates are also sought to be simplified towards a flat 30% tax rate between $45,000 to $200,000 by 2024. In the short term, anyone with a taxable income of $48,000 to $90,000 will receive tax relief of $1,080 with smaller tax relief in the surrounding brackets of $37,001 to $47,999 and $90,001 to $126,000.
As business owners, we all want to be successful and achieve the goals that motivated us to get into business in the first place. For many, it will be business as usual. If you have experienced a slow down over the last few months as your customers waited to see who will be in Government and how that will affect them, hopefully that can now subside and you return to business as usual.
All the best.
Partner – Edgeview Direct