Last night, Treasurer Scott Morrison handed down the 2018-19 Budget. The government expects a return to surplus by 2019-20, a year earlier than planned and after almost a decade of deficits.
Touted as a pre-election budget, there are tax cuts along with some big spending in infrastructure. There are also measures to improve and protect the integrity of the tax system with the black economy being targeted. Fortunately, we haven’t seen major sweeping changes impacting superannuation, but some economists do feel that the government should not increase their spending. That being said, Morrison maintained that the Government continues to "live within its means" despite the budget spending splash.
This budget does provide a welcome relief for low and middle income taxpayers by addressing the bracket creep issue. The government also confirmed its commitment to progressively reduce the company tax rate, however they did not announce it in this budget.
This budget also takes on 72 out of the 75 recommendations outlined in the Black Economy Taskforce’s final report. The black economy refers to people who operate entirely outside the tax system or deliberately misreport their tax obligations. It also includes those engaged in organised crime and the sale of prohibited goods.
The roll-out of the Taxable Payment Reporting System to more industries and the crackdown on those not withholding PAYG are an example of where businesses doing the right thing are punished by the government because of the few who are not.
In last year’s budget, there were significant changes to superannuation. It is good to see that there are no material changes in this budget, which provides some stability. The changes around superannuation will cut some red tape for SMSF’s and help boost retirement funds.
Some say this budget is a shade vanilla, but there are still many things to consider for businesses and business owners. It is a great opportunity to meet with your advisor from PJT Accountants & Business Advisors to discuss how this budget affects you. If you'd like to discuss any aspect of the budget or book in for a Tax Planning Session, please reach out to book a session now.