Federal Budget 2017: what happened last year, and what we can expect

3rd April, 2017

With just over a month left until the Federal Budget, small businesses are understandably eager to see what the government has in store.

Especially after last year. Last year businesses were promised tax cuts, less red tape, widened eligibility for the $20,000 tax write off and simplifying GST compliance.

But the fight over tax cuts wasn’t settled easily.

Unfortunately, many of these decisions take time and small businesses know that any decision designed to benefit SMEs may take years to come to pass.

Which is why it’s crucial to look back at last year’s budget and keep an account of what was promised, whether it was delivered, and if we can expect more of the same in the year ahead.

Let’s get to it.

Company tax cuts

What happened in 2016
The government announced a 10-year tax plan that would see the company tax rate dropped to 25 percent for all businesses over the next decade.

Tax rates will fall for businesses on a threshold basis, with those earning up to $10 million the first to have their rate cut to 27.5 percent from 1 July 2018.

What actually happened?
It took the government a year to pass its tax cuts. In fact, the company tax cut package was only confirmed to pass over the past weekend, with the Nick Xenophon team striking a deal with the government.

But instead of a tax cut for all sized businesses, the new cuts will only apply to those earning up to $50 million a year. The rate will drop to 25 percent in the years up to 2026-2027.

Companies with a turnover of less than $10 million will receive a reduction in their tax rate to 27.5 per cent this financial year.

You can read more about the cuts here.

Changes to GST on low value imports

What happened in 2016
Last year, the government said it would introduce a law to remove the low value GST threshold for imported goods.

Any foreign entities with Australian turnover would need to register and charge businesses for GST.

This was set to take effect from July 1 2017.

What actually happened?
Nothing, yet. The bill is still before Parliament.

Easier compliance for GST and BAS

What happened in 2016
Small businesses rejoiced when the government announced as part of the 2016 Federal Budget that it would ease the compliance burden for all small businesses when reporting GST and BAS.

Of course, there wasn’t much detail at the time. Businesses eagerly awaited more details on anything that would save them with red tape and administration costs.

What actually happened?

More details came over time. The ATO announced that from July 1 2017, businesses won’t have to give as much information when they submit their BAS or GST information.

From 1 July 2017, small businesses will only need to report the following GST information on their BAS:

  • GST on sales
  • GST on purchases
  • Total sales

Another seven categories of information will be removed. More information on the changes are available here.

Instant asset write-off expansion

What happened in 2016

Small businesses rejoiced when the $20,000 instant asset write-off was expanded in last year’s Federal Budget.

The government said it would extend the write-off for another year, and up the threshold for eligible businesses to $10 million revenue, instead of just $2 million.

What actually happened?

The threshold applies for businesses in the current financial year, as per the ATO’s guidelines. As for an extension, you’ll have to wait until next month’s Federal Budget announcement.

So what’s happening this year?

What can businesses expect from the budget this year? While nothing is confirmed, reports suggest:

  • A package to help first home owners get into the property market
  • Deficit reduction measures
  • Extending the Medicare Levy Surcharge to all high income owners

Whether or not there will be more tax measure or benefits for small businesses remains to be seen. But nevertheless, all SMEs should keep an eye out on Tuesday May 9.

MYOB will be publishing budget coverage on the night of the Federal Budget.

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