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With budget night not far away it is a good time to turn our attention to where some of last year’s measures got to and what to expect in the coming budget night.
Right now, we are hearing a lot about:
Dealing with these issues is easier said than done for the government with the Senate proving a hard nut to crack.
So what has happened since budget night 2016?
Well, it took a long time to get this through with the government finally doing a deal with the Senate on Friday 31 March. This package also included a number of other generous tax breaks for businesses with a turnover of $10 million or less. To read more on these significant changes please click here.
Once again it took until November 2016 to get these measures through Parliament and they did change a little after the budget announcements. To read more on these changes please click here.
Those businesses with over $50 million of turnover have missed out on having the 30% corporate tax rate reduced, but we do know that the government still has this on the agenda. With the current situation in the Senate, it’s hard to see the government getting this deal done without some serious sweeteners to convince the cross-benchers.
Our predictions for budget night 2017
We will see some tweaks to these news rules starting on 1 July 2017 but don’t expect anything major now. After all, we are still trying to deal with the new more complicated super system.
Certainly, it is clear that there is a focus on this section of the business community and we might see some additional tax breaks to spur growth. For example, perhaps the immediate write-off of assets costing less than $20,000 might be extended beyond 30 June 2017.
There is a lot of talk about whether or not the 50% CGT discount is too generous with many arguing that it has helped fuel the growth in capital city house prices. Perhaps, we will see the tapering that other countries have. For example, no discount if you hold the asset less than 2 years, 33% discount for between 2 to 4 years and 50% discount over 4 years.
There have been a lot of talk about this particularly with housing affordability being an issue at the moment. A move to restrict or eliminate negative gearing would probably have enough support to comfortably pass through the Senate, however, we cannot see the government touching this one. Let’s face it we can’t see a tweak to negative gearing stopping the Australian love affair with property.
We will see an increase in ATO resources to combat the cash economy. However, other than banning cash transactions, it is hard to see how much of a dent the government or ATO can make on this one. Perhaps we will see some of the actions that other countries took last year in taking high value bank notes out of circulation. Does this mean the $100 note is on the way out?
With most of the tougher tax avoidance measures already in place, this part of the business community is bound to be feeling they are due a break. We can see the government having another crack at lowering the corporate tax rate for big business.
It is always hard to predict a budget and we have all been surprised before. However, as the government has learned the hard way, making announcements is the easy part, but getting it through the Senate is a very different story.