2017-2018 Federal Budget Expert Analysis - Small Business

Key Points

  • Small business $20,000 instant asset write-off extended to 30 June 2018

  • $300 million provided to state and territory governments to remove red tape

  • Medicare levy to increase by 0.5% from 1 July 2019 – Other tax rates to change

The small business instant asset write-off for assets less than $20,000 was originally due to expire on 30 June 2017. It has now been extended by 12 months to 30 June 2018. As previously announced, the small business entity turnover is proposed to increase to $10 million from 1 July 2016. Assets with a value of $20,000 or greater are not eligible for the instant write-off but can be placed into a general small business pool.

In an effort to reduce red tape, particularly to assist small businesses, the Government has established a new National Partnership on Regulatory Reform (NPRR). Under the NPRR, up to $300 million will be provided to State & Territory Governments over two years for the delivery of reforms that drive Australia’s economic performance and living standards, with a focus on small business regulatory reform.

Whilst not directly affecting most small businesses, the Medicare levy is to increase by 0.5% to 2.5% from 1 July 2019. Small businesses should note that this has a consequential impact on tax rates that are linked to the top marginal tax rate, such as the Fringe Benefits Tax Rate, which will also be increased.