In the 2018–19 Federal Budget Liberal Party Treasurer Scott Morrison delivered some good news for small to medium-sized enterprises, not such good news for start-ups and innovators, bad news for shonky operators and projected cause for cautious optimism for the business sector after the next election.
Infrastructure and upskilling emerged as two key themes. The message was upbeat, promising continuing economic growth in line with current global trends, but Guardian Australia columnist Greg Jericho notes that this is dependent on tax revenue from continued growth in employment. The biggest tax cuts and the move towards a flat tax structure (under which people earning between $41,000 and $200,000 would be taxed at the same rate of 32%) won’t be funded by this Budget, one which signals positivity by delivering some gains but also tightens tax controls.
Here’s Gallagher’s take on the 2018–19 Budget takeaways. Unless otherwise stated the budgets apply to four-year periods.
$24.5 billion spending across 29 projects in all states and territories, taking Federal Government commitment to transport infrastructure to $75 billion over the next 10 years.
- Victoria: $7.8 billion, of which $5 billion for an airport rail link is contingent on matched funding from the state government
- New South Wales: $1.5 billion for new projects, including 50% partnership in the new North South rail link
- Western Australia: $2.6 billion
- South Australia: $1.8 billion
- Tasmania: $461 million
- NT: $280 million
Developing and remaining competitive in terms of technical skills and public technology infrastructure are the focus of the Government’s funding incentives.
- The Skilling Australia Fund: $250 million
- Women’s participation in STEM (science, technology, engineering and maths) education and careers: $4.5 million on relevant initiatives
- Artificial intelligence (AI) and machine learning (ML): $29.9 million
- Scientific research infrastructure: $1.9 billion over 12 years
- Mature-age Australians technical skills training: $189.7 million
Small to medium-sized enterprises
SMEs continue to receive a tax break and will benefit from measures aimed at addressing costs and cash flow issues.
- $20,000 tax asset write-off extended 12 months
- Enterprise Tax Plan $27.5% tax rate extended to include businesses with annual turnover of up to $50 million
- Unincorporated small business tax discount increased from 5% to 8%, threshold increased to $10 million
- $20 million to fund an SME Export Hubs program
- Extension of unfair contract terms protection
- Australian Financial Complaints Authority to be instated
- Streamlining of GST reporting
Changes affecting innovators and start-upsInitiatives to support smaller competitors in local and overseas markets are to be delivered along with tightening of access to R&D funding.
- $20 million to fund the Asian Innovation Strategy supporting Australian entrepreneurs
- Instating of an Open Banking Regime and $44.6 million funding for Consumer Data Right enabling customers to switch banking, telecommunications and energy providers securely, facilitating competition from smaller players
- Restructuring and greater rigour in provision of the Research and Development Tax Incentive
- Cash refunds for research and development (R&D) capped at $4 million p.a. for companies with annual turnover of less than $20 million
Actions against the black economy
- Ban on cash payments of more than $10,000
- New measures to prevent illegal phoenixing*
- Increased data analysis and ATO audits
- Instating of a Black Economy Hotline
- Expansion of the Taxable Payments Reporting System
*Companies which go out of business to avoid paying debtors to reopen under a new identity
How Gallagher can help
This Budget has implications for Gallagher’s business, construction and start-up clients in particular and we have specialists across all of the applicable areas of risk exposure raised by its announcement. Take advantage of our expertise and access free of obligation advice by talking to one of Gallagher’s specialist brokers in your area now.