Federal Budget 2017: What It Means For Business
If you’re running a business, considering your own startup, or just want your organisation to thrive, you’ll have a vested interest in knowing the details of the latest Federal Budget. Handed down on May 9, 2017, the budget contains a number of measures slated to kick in in the coming financial year. The proposed measures are yet to be passed in Parliament and may not all survive in their current form.
The instant asset tax write-off scheme was a feature of the 2015 Budget and has been extended in the current budget for another 12 months. It allows businesses with an annual turnover of $10 million or less to instantly deduct business items up to $20,000. Initially, the scheme was due to expire on 30 June 2017. It will now expire on 30 June 2018.
Larger businesses haven’t been forgotten completely. Currently, companies with an aggregated annual turnover below $2 million are taxed at 28.5 per cent and companies with an aggregated annual turnover of $2 million or above are generally taxed at 30 per cent.
The budget will cut both rates so that all businesses with a turnover of less than $50 million will receive a company tax cut, reducing the tax rate to 25% for all businesses. The measure will be introduced progressively over ten years with a staggered raising of the turnover threshold. For further information, see the Australian Taxation Office’s detailed explanation.
Research and development funding
Technology startups can benefit from a new Advanced Manufacturing Fund, which allocates $100 million to various Australian industries. While the bulk of it ($47.5 million) is focused on the automotive industry, there are several smaller initiatives within the amount that aim to increase innovation for the country. These include the Advanced Manufacturing Growth Centre with $4 million in funding, which will go to small scale and pilot projects conducted by startups and researchers, and Innovation Labs to be established in South Australia and Victoria with $10 million in funding.
Companies who rely on overseas talent to help their businesses may face cost hurdles. A new levy is proposed on employers who use workers under both temporary and permanent skilled visas. Small businesses will pay an annual foreign worker visa levy of $1,200, with larger businesses up for $1,800. Employers sponsoring a permanent skilled worker visa will pay a levy of either $3,000 (smaller businesses) or $5,000 (larger businesses).
There are also higher charges on visa application fees, which will be indexed in-line with inflation.
Bear in mind that the Federal Budget has to be approved by both the House of Representatives and the Senate before it takes effect, and there may be a number of changes or amendments by that point. Many measures in the 2014 Budget, for example, have never been enacted and are now dropped. Don’t take action based on the measures in this Budget without seeking professional advice.
This article was written by Tanya Ashworth-Keppel on behalf of the Australian Institute of Business. All opinions are that of the writer and do not necessarily reflect the opinion of AIB. The following sources were used to compile this article: Australian Taxation Office and Budget 2017-18.