Budget 2018 proposals summarised for bookkeepers

The 2018 Federal Budget delivered on strategies appearing to be geared toward continuing support of Australian Small Business and increasing activities on stamping out the black economy and catching those doing the wrong thing. 

It is important to note that these proposed budgetary provisions are yet to pass through the legislative process to receive Royal Ascent.

 

Individual tax rate changes

Essentially phased in over a 3-step implementation, tax brackets for individual taxpayers will shift:

 

  • 1 July 2018 – the 32.5% marginal bracket top end will increase from $87k to $90k

  • 1 July 2022 – the 19% upper limit will increase to $41k and the 32.5% bracket top end will increase further to $120k

  • 1 July 2024 – the 32.5% bracket will again increase to $200k

 

A one-off tax offset will apply to low and middle income tax earners, meaning up to an additional $530 in the back pockets of these individuals at tax time.  This is paid in addition to the existing Low Income Tax Offset (LITO).

 

TPB 3-year renewal fee increase for BAS agents

The TPB are receiving an overall funding increase funded by a hike in fees paid by practitioners to register with the board.  The 3-year renewal fee will increase from $100 to $135 and the renewal option for BAS agents who are ‘not in business’ to renew for $50 will be removed, meaning all registrations will now cost $135.

 

ATO to receive additional funding to support transition to the STP regime

The ATO has been allocated an additional $15M in funding to roll out education programs and support to small and micro-employers for the transition to the new STP reporting regime.

 

ATO extending activities related to non-compliance and the black economy

Programs will be ramped up and extended, particularly in relation to reducing activities around:

  • The Black Economy and initiatives continuing to be led by The Black Economy Taskforce

  • Phoenixing

  • Tax evasion

  • Incorrect claims related to Work Related Expenses and private usage of assets

  • Superannuation compliance

TPAR’s reach extended

The Taxable Payments Annual Reporting (TPAR) regime will extend to the cleaning and courier industries from 1 July 2018 and further, to the security and road transport industries from 1 July 2019.

 

GST to apply to international web-based accommodation booking services

From 1 July 2019 web-based booking services for accommodation supplied in Australia will be required to collect and remit GST, impacting services such as Hotels.com, tripadviser, Airbnb etc.

 

Business payments in excess of $10k restrictions

All payments made for business purposes in excess of $10k will be required to be made electronically or via cheque as of 1st July 2019.

 

No withholdings, no deduction!

For businesses who are required to report and pay PAYGW to the ATO from employees or no ABN withholdings from their contractors where a valid ABN has not been supplied, deductions for these whole payments will be disallowed under the proposed new arrangements.  More detail is required from a technical perspective around these preclusions as the policy develops in parliamentary discussions.

 

No deductions for expenses incurred from holding vacant land

Proposed legislation changes will disallow deductions for holding vacant land, where the land is not genuinely held to earn assessable income.  This is hoped to de-incentivise the holding of land for tax planning purposes and free up the land for housing and other commercial developments.  Disallowed deductions will not be able to be carried forward for use in later income years where assessable income may begin to apply to the vacant land.  Disallowed deductions for vacant land will not apply to cost base for CGT purposes if it is not ordinarily a cost base element.