On 2 April 2019, the Australian Government announced its 2019-20 Budget. The Government is lowering taxes for working Australians and backing small and medium‑size business, while ensuring all taxpayers, including big business and multinationals, pay their fair share.
There are a number of initiatives for Australian businesses including:
- Increasing the instant asset write-off threshold to $30,000.
- Expanding access to medium sized businesses with an annual turnover of less than $50 million to help them reinvest in their business, employ more workers and grow.
- The $3.5 million Making Innovation Games National measure will pilot a national version of this initiative. The Games will bring together small and medium sized businesses, students and graduates, and corporate sponsors. Working together participants will address technological and digital challenges facing Australian businesses by developing tailored, practical solutions.
- Fast-tracking the company tax rate cut to 25 per cent for small and medium sized companies with an annual turnover of less than $50 million and increases to the unincorporated small business tax discount rate.
- Establishing the $2 billion Australian Business Securitization Fund, which will enhance small businesses’ access to finance.
- Establishing an e-Invoicing system for Australia which could save businesses an estimated $28 billion in transaction costs over 10 years and increase opportunities to trade globally.
Backing small business
Government has lowered the small business tax rate and in this Budget will increase and expand access to the instant asset write-off and provided lower taxes for around 3.4 million businesses employing around 7.1 million workers.
The Government has legislated lower tax rates for small and medium‑sized companies with turnovers below $50 million. Small and medium‑sized companies currently facing a 27.5 per cent rate will have a 25 per cent rate by 2021-22, which is five years earlier than previously planned. This compares to the standard company tax rate of 30 per cent.
Fast-tracking these tax cuts will benefit around 970,000 small and medium per centsized companies that employ around 5.2 million workers.
The Government has also legislated to bring forward the increases to the unincorporated small business tax discount rate, rising from 8 per cent currently to 13 per cent in 2020-21 and to 16 per cent from 2021 per cent22 (up to the existing cap of $1,000). This will benefit around 2.4 million businesses, employing around 1.9 million workers.
Incentives to invest and grow
In this Budget, the Government is increasing the instant asset write-off threshold to $30,000 until 30 June 2020. The threshold applies on a per asset basis, so eligible businesses can instantly write off multiple assets. This builds on the Government’s earlier announcement that the instant asset write-off threshold would be increased from $20,000 to $25,000 and extended to 30 June 2020. More than 350,000 businesses have already taken advantage of the instant asset write‑off.
The Government is also expanding access to the instant asset write-off to include medium‑sized businesses by increasing the annual turnover threshold from $10 million to $50 million. Around 22,000 additional businesses employing around 1.7 million workers will now be eligible to access the instant asset write-off.
Maintaining the integrity of the tax system
The Government is committed to maintaining the integrity and sustainability of Australia’s tax system where everyone pays their fair share of tax. This includes ensuring that multinationals pay the correct amount of tax on their Australian profits. The Government has implemented more than a dozen measures to strengthen the integrity of Australia’s international tax framework. These measures include implementing the Multinational Anti-Avoidance Law, the Diverted Profits Tax, the G20/OECD Base Erosion and Profit Shifting (BEPS) recommendations, increased tax penalties for large entities, and establishing a Tax Avoidance Taskforce within the ATO.
