Our Predictions For Budget Night 2017

[ what to expect ]
by Michael Garrone Published

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:

  • housing affordability,
  • small to medium businesses being the engine room of the economy,
  • tax cuts for big business or tougher tax avoidance measures, and
  • a crack down on the cash economy.

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?

1. Corporate tax rate reduction to 27.5% from 1 July 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.

2. Superannuation 

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.

3. Big business

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

1. Superannuation

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.

2. Small to Medium Business

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.

3. Capital Gains Tax (CGT) 

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.

4. Negative Gearing Changes 

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.

5. Cash Economy 

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?

6. Big Business 

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.


Summary

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.

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.

Michael Garrone is an authorised representative [No. 1240832] of Hunter Green Pty Ltd AFSL 225962. Your Adviser may offer you services through Depot Superannuation Pty Ltd which is a separate business. Although the same Adviser may offer you services under the above businesses, each business is solely and separately responsible for the advice they each provide. In particular, Hunter Green is only responsible for the financial planning services provided by Michael Garrone.

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