The Treasurer has released the federal budget for 2017/18, which includes new measures for SME owners.
$20,000 instant asset write-off
Treasurer Scott Morrison revealed the highly popular measure would be extended, and also be made available to businesses with a larger turnover.
“Small businesses with a turnover up to $10 million will continue to be able to immediately write off expenditure up to $20,000 for a further year,” he said.
The measure – which originally applied to businesses with a turnover of up to $2 million – had been due to expire on June 30, 2017.
It will now expire on the same date in 2018.
Business tax cuts
The Ten Year Enterprise Tax Plan, unveiled in last year’s federal budget, remains on track.
Incorporated small businesses with turnover up to $10 million will have their rate of tax cut to 27.5 per cent for the current financial year. The government says this is the lowest rate of tax that SMEs have accessed for 50 years.
Meanwhile those businesses with turnover above that threshold, up to $50 million, will receive the same tax rate from the 2018-19 financial year.
Unincorporated businesses with annual turnover of up to $5 million will receive an increase in the unincorporated tax discount, taking the rate to 8 per cent.
Red tape cuts
The government announced measures to encourage state governments to cut their red tape strangling SMEs.
On offer are incentives worth up to $300 million over two years for states that slash unnecessary restrictions on these businesses, including regulatory frameworks that impede competition in the marketplace.
It comes as the government claims to have stripped $5.8 billion worth of federal red tape burden on businesses and the community through its own serious of reforms, although did not specify which reforms or how the figure was calculated.
Following the fiery debate that erupted last month following the unexpected abolition of 457 temporary worker visas, Mr Morrison said that the current arrangement, which sees employers contribute 1 to 2 per cent of their payroll to training when employing foreign workers, would be scrapped.
In its place, he unveiled a new annual foreign worker levy, with the funds raised to go into a new Commonwealth-State Skilling Australians Fund.
“We are replacing these requirements with an annual foreign worker levy of $1,200 or $1,800 per worker per year on temporary work visas and a $3,000 or $5,000 one-off levy for those on a permanent skilled visa,” Mr Morrison said.
The fund is expected to contribute $1.5 billion to state and territory governments in its first four years, with a focus on apprenticeships and traineeships in high-demand occupations that currently rely on skilled migration, as well as regional areas and future growth industries.
In addition, the government will dedicate a further $263 million to the ParentsNext service.
ParentsNext aims to provide the parents of young children with tailored support to return to work. Its services will be expanded nationally.
Banking regulation to benefit customers
Following a number of high-profile scandals in Australia’s banking sector, the government announced the establishment of the Australian Financial Complaints Authority.
According to Mr Morrison, the new authority will be “a simpler, more accessible and more affordable one-stop shop for Australians to resolve their disputes and obtain binding outcomes from the banks and other financial institutions.”
“If banks breach misconduct rules, they will also face bigger fines starting at $50 million for small banks and $200 million for large banks,” he said.
The major banks are being called the ‘biggest losers’ in the budget, with increased regulatory oversight on senior executives, a permanent team in the ACCC to investigate competition in the banking and financial sector, as well as a new levy being brought in for the five biggest banks, expecting to bring in $6.2 billion over the budget.
The levy will be calculated quarterly as 0.015 per cent of an ADI’s licensed entity liabilities.
The federal government also outlined that the Australian Competition and Consumer Commission (ACCC) will undertake a residential mortgage pricing inquiry until 30 June 2018.
As part of this inquiry, the ACCC will be able to require relevant banks to explain changes or proposed changes to residential mortgage pricing, including changes to fees, charges, or interest rates by those ADIs.
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