What’s new

10 May 2018

Budget 2018 - Businesses

Changes Affecting Business Taxpayers

Extension to the $20,000 instant asset write off

The government will extend the current instant asset write-off (or accelerated depreciation) for small business entities by a further 12 months to 30 June 2019. This applies to small businesses with an aggregated annual turnover less than $10 million.

The threshold amount was due to return to $1,000 on 1 July 2018. With the extension, small businesses will be able to immediately deduct purchases of eligible depreciating assets costing less than $20,000, or $22,000 if the business is registered for GST, that are acquired and first used or installed ready for use by 30 June 2019.

The threshold for instant asset write-off will revert to $1,000 on 1 July 2019.

Assets valued at $20,000 or more can continue to be placed into the general small business pool and depreciated at 15% in the first year and then 30% each income year thereafter. The pool can also be immediately deducted if the balance is less than $20,000 over the period between 1 July 2017 and 30 June 2019 (including existing pools).

Note: While the extension of the instant asset write-off will be welcomed, small businesses need to have the cash flow to enable them to spend the $20,000 on the asset/s in the first place.

 

Expanding the contractor payment reporting system

From 1 July 2018 the taxable payments reporting system (TPRS) on contractor payments will be extended to the cleaning and courier industries.

The government will further extend the taxable payments reporting system (TPRS) to the following industries:

  • Security providers and investigation services
  • Road freight transport
  • Computer system design and related services

Businesses in the above industries will need to collect information from 1 July 2019, with the first annual report required in August 2020.

The TPRS was initially introduced in the building and construction industry. A new online form will make the reporting processing easier.

 

Division 7A changes (director’s loans)

The government has announced changes to Division 7A of the ITAA, which relates to director’s loans and benefits provided by a company to related taxpayers.

Division 7A requires funds withdrawn or benefits provided by a private company to related taxpayers be taxed as dividends, unless they are structured as complying loans or another exemption applies.

The impact of these changes on director’s loans in private companies may need to be addressed further. Those operating inside companies will need to review all outstanding director’s loans to make sure compliance with Division 7A rules. The measures come into effect from 1 July 2019.

 

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.  

 


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