Another year, another budget and another raft of changes.
Remembering that nothing is legislated, and it may all change and be tweeked as it goes through parliament, here is a brief synopsis of the main points of interest.
Most of the changes this year are fairly minor, with lots working to eliminate the cash economy and get everyone paying tax – even your cleaner!
The headline grabber of eliminating a tax band, and big reductions in tax for those “middle income earners”, is at least six years and one election away, so don’t hold your breath. Be grateful for the small tax offset (not the same as a refund) in the meantime.
The good points are that there were no major changes to super, no introduction of standard work deductions, no increase in the medicare levy, and an extension of the $20k asset write off for small businesses for another 12 months. It’s a vote winning budget.
Unexpected changes were the increase in SMSF members from 4 to 6. Allowing funds to have a few extra members to enable them to hold large, chunky property assets but still remain under the $1.6m cap. These setups are great until one member gets divorced, dies or loses their marbles. Unwinding them can then become very tricky in deed.
Still on super, well behaved SMSFs with clean audit reports & a timely lodgement history will be allowed to have an audit every third year instead of every year. This will save about $350 a year in admin fees, and of course your paperwork will still need to be correct.
The work test will be waived for those between 64 and 74 for one year after the year they last passed the work test, to allow them to pop a bit more into super. A good idea.
Another sensible change is that those with more than one employer will be able to opt out of SGC to avoid breaching the $25k cap. If you this do though, don’t forget to request a pay rise to make up for the lost super.
Changes to the rules allowing reverse mortgages for pensioners will mean that pensioners can draw an additional $11,799 each year for living expenses from the equity in their home. Couples can draw $17,787. However there are still no lump sum draws allowed.
To clamp down on the cash economy, the types of businesses that need to report to the ATO every single contractor they pay is widening. Already this is required in building and construction, but it will extend to couriers, cleaners, security, road freight, computing and IT over the next few years. The reporting is not too time consuming if you have up to date book keeping software that supports it. Remember if you are a contractor, the ATO will know what you have been paid and by whom.
Businesses will not be able to claim a deduction for any payments made to contractors who don’t have an ABN, or for any “off the cuff” wage payments which have not gone through the proper payroll system. With single touch payroll looming, all businesses paying staff really need book keeping software that supports it.
Finally, cash payments of more than $10k to businesses will be banned. The idea being that you won’t be encouraged to pay cash to tradies to get a discount as is currently common practice. The “Black Economy Standing Taskforce” will have mobile strike teams and a dob-in hot line to keep everyone honest.
As ever, if you want to discuss any particular change that you believe may affect you, please just pick up the phone and call
Lindsay 0413 952 180