The Federal Treasurer has presented the 2017 Budget to parliament and, amid all the hype, it can be confusing to know how it may impact your business. We’ve outlined the most important aspects of the proposed changes as we see them potentially affecting SMEs.
National Partnership on Regulatory Reform (NPRR)
The Federal Government has committed $300 million over 2 years to work with state and territory governments to reduce or remove red tape restricting small businesses, especially impediments to competition. How this will work in practice remains to be seen but this could potentially be very good news for business owners.
Individual tax rates
Workers won’t be receiving any tax cuts in this budget with the tax rates for 2017/18 as per below:
| Taxable income | Tax on this income | Rates |
| $0-$18,200 | Nil | 0% |
| $18,201-$37,000 | 19c for each $1 over $18,200 | 19% |
| $37,001-$87,000 | $3,572 plus 32.5c for each $1 over $37,000 | 32.5% |
| $87,001-$180,000 | $19,822 plus 37c for each $1 over $87,000 | 37% |
| Over $180,000 | $54,232 plus 45c for each $1 over $180,000 | 45% |
The government has also proposed to increase the Medicare levy from 2% to 2.5% for all taxpayers (except for those currently exempt) from July 2019 to help pay for the NDIS. Other tax rates linked to the top personal tax rates, such as Fringe Benefits Tax, will also be increased. Those employees who have outstanding Higher Education Loan Program (HELP) debt will need to start paying back more debt sooner so it’s important you are using the latest tax scales to ensure your employees are paying the correct tax rate.
Superannuation
There are no changes to the current super guarantee rate of 9.5% however the government is proposing first home buyers to be able to make voluntary super contributions up to $15,000 per year to a maximum of $30,000 which can then be used as a deposit for a home loan. Again, it’s not really clear how this will work in practice so we’ll just have to wait and see.
Single Touch Payroll
Single Touch Payroll (STP) is an initiative aimed at making it easier for employers to report PAYG obligations to the ATO. From 01 July 2018, large businesses, those with more than 20 employees, will need to lodge their PAYG obligations at the completion of each pay run. Employers can begin to report through STP from 01 July 2017, as payroll solutions become compliant. To determine if they are required to report STP, employers must conduct a head count of their employees on 01 April 2018.
Skilling Australian Fund Levy
Following on from the cancellation of the 457 visa, effective March 2018, businesses employing foreign workers on certain types of visa will need to pay a levy which will contribute to the Skilling Australians Fund. The rates vary depending on the type of visa and the size of the business. More information can be found on the Department of Immigration website.
Changes to BAS
The government has reduced the amount of GST information required for BAS lodgments with the aim of simplifying GST bookkeeping and reporting requirements. This will save small businesses time by simplifying the account set-up and BAS preparation as it will be easier to classify transactions. From 01 July 2017, small businesses will only need to report GST on sales (1A), GST on purchases (1B) and total sales (G1). You will no longer need to report export sales (g2), other GST-free sales (G3), capital purchases (G10) and non-capital purchases (G11).
Taxable Payments Reporting System (TPRS)
The TPRS will be extended to contractors in the courier and cleaning industries from 01 July 2017. This is part of the government’s attempts to crack down on the so-called ‘cash economy’.
Instant Asset Tax Write-off
The $20,000 instant asset tax write-off which was due to expire on 30 June 2017 has been extended for another 12 months. It will also be available for more businesses as enterprises with a turnover of up to $10 million will be eligible from 01 July.
Where to from here?
This is what we suggest you do next:
- Update your payroll software so that you have the latest tax tables
- Make sure your employee details are correctly set up
- Ensure any additional superannuation payments are set up correctly
- Be aware of any Single Touch Payroll obligations
- Take advantage of the Simpler BAS initiatives
If you require any assistance or have any questions with any of the above, feel free to get in touch.
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