Budget Release - What’s in, what’s out & what could be on the agenda?

by Michael Garrone Published

There has been so much discussion lately in the media on the tax system and the changes that could be proposed in the upcoming May 3 budget [yes the excitement is building for the bean counters amongst us]. In the real world, small to medium businesses [and the people behind them] have to keep rolling along. Uncertainty is no use when you need to make decisions important to the growth and sustainability of your business that you rely on just to pay the bills and provide for the family.

We therefore thought it would be useful to summarise what has already been announced by the government and what else could potentially be on the agenda.

1. There will be no increase to the GST rate. 

Although this would seem like an easy change popular with all Treasury departments in the country it has been announced that it will not be on the agenda this year. 

2. No changes to negative gearing are expected.

This issue raises its head every now and then. Very few countries allow negative gearing in the same way as Australia and maybe there is something in that, but nevertheless it appears this proposed change has been shelved.

3. No handouts unless something else is cut.  

No more to be said on this one.

4. It appears super will largely be untouched with some tinkering around the edges

See our earlier article for what you should be doing before budget night. Click here to read more.

This is more likely to affect high income earners and those with large super balances.

5. Changes to the 50% capital gains tax discount where investment assets are held for over 12 months. 

While it’s not expected to be abolished, maybe we will get a tapering type system, for example, 0% discount for the first 2 years, 33% for 2 to 4 years and 50% for everything over 4 years.

6. Changes to the Small business CGT concessions on sale of a business. 

A number of reviews have suggested removing or simplifying these measures – with a bit of luck these rules will stay in place to facilitate the retirement of business owners but don't be surprised if some of them are tapered back.

7.  Reduction in personal tax rates to stimulate growth. 

A good idea in principal but it will need to be paid for somehow – will economic growth on its own be enough?

8. Reduction in company tax rates to stimulate business investment. 

Again a good idea in principal. Remember though, a change in the company tax rate for smaller business is less likely to have an effect given how the current dividend imputation system works.

9. Reduction in the benefits of the imputation system with perhaps a removal of full refunds of franking credits. 

Similar to negative gearing this one seems to come up regularly. There is perhaps a question of sustainability where tax free super pensions get a full refund of franking credits.

10. The Tax White Paper recommendations will be included with the budget. 

We have been waiting for over a year to see what these recommendations will finally look like – this certainly won’t be a standard budget.

Keep an eye out for out full budget break down on the morning of 4 May. To make sure you receive this simply subscribe at www.businessdepot.com.au/subscribe.

In the meantime, if you need to make decisions in your business - SEEK ADVICE!

Michael Garrone
read more by Michael Garrone

Michael is our Tax Specialist Director as well as the head of our business advisory niches of Building and Construction and Property.

With Michael's extensive experience and a real interest in these niche areas he is able to provide practical business and tax advice that is unique to the Building and Construction and Property industries. His tailored advice helps guide these businesses through start-up phase to succession and sale. Michael has many years’ experience in solving complex problems involving corporate tax, restructures, international taxation, Capital Gains Tax and GST. 

Michael also has a strong background in self-managed superannuation and is an authorised representative of superannuationDEPOT. In this area Michael provides strategic advice on SMSF structures and in particular limited recourse borrowing arrangements. Through this diverse experience Michael has developed expertise within a wide range of industries including building and construction, property, professional services (legal, engineering & finance), technology and software and manufacturing.

[ Never miss a Tool, Tip, Resource or Event ]

Join the businessDEPOT community and get the latest advice
and insight directly to your inbox.

Tax

Get All Zen With Your Tax

Get In Touch

insights

[ We help businesses and individuals of all shapes and sizes, and provide insight based on our extensive experience. ]

[ About ]

[ businessDEPOT is driven by a team of plain-talking, energetic and proactive people, and we believe in a fresh approach to providing advice and accounting services. ]