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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
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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.
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