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2019 Budget – what it means for business

2019 budget explained for business

The 2019-2020 Federal Budget was announced on 2 April 2019. Do you understand what it will mean for you and your business? Here is a keep-it-simple breakdown.

Of course, if you have specific questions in relation to your business, please contact CVW Accounting – we are happy to help.

 

Increased accountability for ABN holders

The Federal Government is endeavouring to strengthen the Australian Business Number system by increasing accountability.

From 1 July 2021, all ABN holders will be required to lodge an income tax return where there is an income tax return obligation. From 1 July 2022, ABN holders will be obligated to confirm ABN details every year.

Non-compliance with the measures may result in the loss of the ABN.

 

Big business tax avoidance on the radar

To ensure multinationals pay the correct amount of tax, the government has;

  • Updated the list of information exchange countries

The list of countries and its residents eligible to access a reduced withholding tax rate (15%) on particular distributions from Australian Managed Investment Trusts (MITs) has been widened. The information exchange plays a role in minimising offshore tax evasion.

The update will take effect on 1 January 2020. It will add Curaçao, Lebanon, Nauru, Pakistan, Panama, Peru, Qatar and the United Arab Emirates to the other 114 jurisdictions on the list.

  • Announced the Australia-Israel Tax Treaty

The Treaty aims to improve certainty for taxpayers in both countries. It addresses double taxation issues and lowering withholding tax on interest, dividend and royalty payments.

  • Clarified the operation of the hybrid mismatch rules

These rules inhibit multinationals from exploiting differences in how an entity is treated in different jurisdictions in order to gain a tax advantage. The Government plan to make minor changes to clarify how the hybrid mismatch rules operate. The measures will apply to income years on or after 1 January 2019, with the exception of the amendments to the integrity rule. This rule will apply to income years on or after 2 April 2019.

  • Increased funding to the ATO Tax Avoidance Taskforce

High net wealth individuals will face greater scrutiny with increased funding to the Tax Avoidance Taxforce. Over the next 4 years, $1 billion of funding is set to be allocated to focus on;

– tax advisors that promote tax avoidance strategies

– tax compliance activities of high wealth individuals, trusts, large public and private groups and multinationals

 

Compliance targeted in key risk areas

Division 7A Proposed Amendment start date deferred

The Government announced the deferral to Division 7A proposed amendments start date until 1 July 2020. The deferral was in response to the Government’s October 2018 consultation paper. Implementation issues were identified that need stakeholder consideration and consultation to ensure taxpayers are not unfairly prejudiced.

 

Debt collection funding for collection of unpaid tax and super

$42.1 million to the ATO

Over the next four years, these funds will assist to increase debt collection activities in order to recover unpaid tax and superannuation liabilities. The spotlight will be on big business and high net wealth individuals.

 

Construction sector investigations planned

The budget included the provision of $9.4 million over four years to fund Australian Competition Consumer Commission (ACCC) investigations in the commercial construction sector.

 

Single Touch Payroll data collection expansion

More than $82 million over four years

These funds will support the expansion of data collected through Single Touch Payroll (STP) by the ATO and other Commonwealth agencies.

STP data collection will be expanded to include further information about gross pay and other details. These changes aim to reduce the compliance burden for employers and individuals reporting to multiple Government agencies.

 

Funding for Sham Contracting Unit

The Government will provide $9.2 million to create a Sham Contracting Unit within the Fair Work Ombudsman. The unit will target behaviour of employers who knowingly misrepresent employment relationships to avoid statutory obligations and employment entitlements.

 

Asset write-offs

The threshold for the $20,000 instant asset write-off increased to $30,000 from 2 April 2019 until 30 June 2020. Plus, businesses able to access the write-off will increase. Currently only businesses with an aggregated turnover under $10 million qualify. However from 2019 Budget night, businesses with an aggregated turnover under $50 million will be able to access the write-off. Of course, conditions will apply so make a note to discuss this with your accountant. Plus, at the time of writing this bog, the initiative was still pending legislation so don’t go out on that spending spree just yet.

 

Luxury car tax refunds to increase

Vehicles purchased on or after 1 July 2019 by eligible primary producers and tourism operators

These producers and operators will be able to apply for a refund of any luxury car tax paid, up to a maximum of $10,000. Criteria and types of vehicles entitled for the current refund will stay the same under the new arrangements.

 

Export Market Development Scheme funding

$60 million over three years

This funding is intended to support Australian businesses export Australian goods and services overseas.

 

Feeling overwhelmed by that? Don’t fret, instead contact us or drop in to the CVW Accounting office in East Perth for a cuppa and a chat about how the proposed budget might impact your business.

 

 

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