- Forecast surplus of $7.1 billion in 2019-20
- 'Enhanced' personal income tax cuts for low and middle-income earners in 2019 tax returns
- Instant asset write-off threshold boosted to $30,000 from Budget night
Treasurer Josh Frydenberg's first Budget Speech is littered with none too subtle references to the increased tax proposals of the Opposition. Clearly, taxes will be a key battleground in the May 2019 Federal Election.
"Frydenberg entices voters with personal tax cuts even bigger than last year's legislated offering."
Small business is wooed with a $30,000 instant asset write-off threshold. And older Australians will be able to put more into superannuation.
The Treasurer proposed massive spending on infrastructure projects across Australia, together with a range of vote-winning health announcements and 'guaranteeing Medicare' initiatives. An Energy Assistance Payment will be paid to age and disability support pensioners, recipients of Carer Payment and Parenting Payment Single, eligible veterans and their dependants.
All this whilst delivering a return to surplus in 2019-20 and beyond, with net government debt projected to be eliminated by 2029-30.
The Treasurer attributes this largely to spending restraint, budget repair measures, and a welcome boost to revenue from strengthening commodity prices. The Australia Taxation Office (ATO) can also take some credit for extracting more personal income tax with lower-than-expected deductions.
Tax Commissioner Chris Jordan will receive even more Tax Avoidance Taskforce funding ($1 billion over four years from 2019-20), with multinationals, large public and private groups, trusts and high wealth individuals in the firing line. All these taxpayer segments will need help from good advisers.
Chartered Accountants in public practice will have no shortage of discussion points for clients over coming months but most relate to the possibility of a Labor win at the polls.
CA ANZ has compiled a list of the Australian Labor Party policies on taxation:
Labor’s tax proposalsRead More
Clients need warning that the Coalition's increased instant asset write-off thresholds ($25,000 to apply from 29 January 2019 and $30,000 from Budget night) and the 2019 Budget's enhanced personal tax cuts have yet to pass Parliament. The message is simple: don't bank the tax savings just yet.
More black economy measures
Tax agents should inform ABN holders that failure to comply with income tax return obligations from 1 July 2021 will result in termination of their ABN. From 1 July 2022, it will also be mandatory to keep ABN information up-to-date on the Australian Business Register (a task which clients will likely expect their accountant to perform).
Sham contracting arrangements will be the focus of a dedicated team within the office of the Fair Work Ombudsman funded to the tune of $9.2 million for four years from 2019-20 (and $2.3 million per year ongoing).
All quiet on Division 7A front
No news is not necessarily good news for those waiting for the outcome of the government's deliberations on Division 7A (disguised profit distributions from private companies). Despite input from CA ANZ and others to Board of Taxation and Treasury consultation processes, it appears too hard to progress foreshadowed changes, with the government deferring the start date of yet-to-be-announced changes to 1 July 2020. The delay may be attributable to a desire not to rock the boat prior to an election.
CA ANZ hopes the ATO will now publish further administrative guidance on what taxpayers and their advisers should do in the interim.
Single Touch Payroll expansion and tax-related technology
The current roll-out of Single Touch Payroll is clearly just Stage 1 of a much bigger plan, with the ATO and Department of Veterans' Affairs allocated $82.4 million over four years from 2019-20 to support greater STP data sharing amongst government agencies such as the Department of Human Services.
The government will also provide $67.1 million in 2019-20 to continue development of the GovPass Program, code for a national digital identity program which will eventually give all Australians access to online government services.
Tax agents have long been concerned whether Australians will be increasingly enticed into myTax, self-serve, online tax return preparation and lodgment, and this latest investment will only add to their fears.
North Queensland flood recovery
CAs in North Queensland who have been busy helping clients get back on their feet will be heartened by the Budget decision to treat qualifying grants as non-assessable, non-exempt income for income tax purposes.
Export Market Development Grants boosted – SME energy grants
The EMDG scheme will receive a welcome $60 million injection to boost reimbursement levels of eligible marketing expenditure for SME exporters. The funding will be spread over three years from 2019-20.
The Budget also indicated that SMEs would be eligible for a share of grants under the Energy Efficient Communities Program ($20,000 to $25,000 depending on energy usage).
Tax exemption for Men's Sheds and Women's Sheds
Finally, older CAs and clients approaching retirement will be pleased to learn that deductible gift recipient status will extend to Men's Sheds and Women's Sheds from 1 July 2020. Every shed will be on the look-out for a good retired accountant…
2019 Federal Budget
More coverage on the 2019-20 Federal Budget.Find out more