2018-19 Federal Budget Report: Small Business

Small Wins for Small Business

The Government has elected to extend the $20,000 instant asset write off for a further 12 months. However the ATO are continuing to target non-compliance, whether intentional or not.

What was announced

  • Small business $20,000 instant asset write off further extended to 30 June 2019
  • Government remains committed to Ten Year Enterprise Plan
  • Denial of deductions where ABN or PAYG Withholding not correctly applied

Small Business depreciation measures

Originally expected to end on 30 June 2018, the Government has elected to extend the $20,000 instant asset write off for a further 12 months for eligible small businesses. Businesses with turnover of <$10 million continue to be eligible to deduct assets costing up to $20,000 in full where the asset is first used or installed and ready for use by 30 June 2019. However, in-house software and horticultural plants are specifically excluded as eligible assets.

Similarly, instant deductions continue to be available for simplified depreciation pools if the balance is less than $20,000. Pools otherwise continue to be depreciable at 15% for the first year and 30% per year thereafter.

The ‘lock-out’ simplified depreciation rules continue to be suspended until 30 June 2019. These rules would otherwise prevent small businesses from re-entering the simplified depreciation regime for five years after a business opts out of the regime.

Commitment to Ten Year Enterprise Tax Plan

Despite recent setbacks in the House of Representatives, the Government remains committed to its Ten Year Enterprise Tax Plan to reduce the corporate tax rate to 25% for all corporate tax entities by 2026-27.

Deductions denied for incorrect withholding

Businesses are currently ineligible to claim tax deductions for interest or royalties paid to non-resident recipients where no tax withholding is applied.

From 1 July 2019 the Government is proposing to expand the denial of deductions for taxpayers who fail to withhold on payments to contractors who do not provide an ABN or who fail to withhold on wages payments to employees.

Concessional taxation for craft brewers and distillers

From 1 July 2019 changes are to be introduced to assist craft brewers and distillers to ensure that alcohol excise is applied equally to craft brewers/ distillers and large breweries alike.