Federal Budget 2019 – surplus to deliver certainty in a year of election
With a number of measures to stimulate consumer spending and ease the burden of cost for small businesses, the surplus may ease concerns regarding the global economy.
Federal Budget 2019 has arrived, and it couldn’t be at a more precarious time for the Australian Government.
With a Federal Election expected to be announced any day, it’s no surprise that Minister Josh Frydenberg came in strong by introducing this Budget as putting Australia ‘back in black’ with a surplus of $7.1 billion.
And that is likely to be positively received by business owners as, according to MYOB CEO Tim Reed, healthy business practices can also apply to government spending.
“Business, particularly small business, does well when the economy does well,” said Reed.
“We are reassured by the health of economy today and going forward.
“As every small business owner needs to balance their budget, so too should the Government.”
In fact, Frydenberg announced the Government’s aim to achieve $45 billion in surpluses from now until 2023.
“Surpluses will continue to build toward one percent of GDP within a decade,” Frydenberg said.
Where does that leave Government spending?
While Frydenberg outlined a budget that would assist in building Australia’s infrastructure and supporting the job market, he was clear to highlight that it would do so without raising taxes.
In fact, one of the first of the key measures outlined by Federal Budget 2019 was to increase tax relief for low to middle income earners.
“The Government is more than doubling the low and middle income tax offset from 2018-19.”
This means a single income household would now expect to receive up to $1,080 per year (or $2,160 for dual income households).
“The personal income tax cuts are welcomed as not only do personal income tax cuts provide much needed relief to household budgets, they stimulate the economy with small businesses right across the country benefiting from renewed consumer confidence to spend,” said Reed.
“We know that the type of measures introduced in the Budget tonight will encourage more people to start a business and for those already in business, to invest and create more jobs.”
Which leads to… increasing the Instant Tax Write-Off to $30,000
A popular and supposedly temporary initiative, the Instant Asset Write-Off has been a popular way for small business to deduct against large business purchases such as machinery or other key assets.
Originally, that write-off could be applied to purchases up to $20,000 and was only to be used by businesses with a turnover of up to $10 million.
Now the Government has announced it will be extended once more, applicable to purchases up to $30,000 and businesses turning over up to $50 million will now be able to apply it.
“This will cover an additional 22,000 businesses, employing 1.7 million Australians,” said Frydenberg.
“Already more than 350,000 businesses have taken up the instant asset write-off… now, even more will have the chance to do so.”
Reed applauded the Government’s announcement, but questioned why such a worthy small business benefit has not yet been made permanent.
“The increase in the instant asset write off to $30,000 is welcomed as it provides a significant opportunity for small businesses to grow and stimulate the economy,” Reed said.
“It would be a welcome commitment to see the Government make this a permanent feature of the small business tax system.”
Other key highlights from Federal Budget 2019:
- New ABN regulations to make sure they’re being used properly
- Skills shortage payments to incentivise the hiring of apprentices
- ATO funding boost to crack down on dodgy contracting
The Final Word
In all, Federal Budget 2019 is dressed up to give the Government a glowing financial report card.
And while the fiscal policy of reducing a nation’s debt is a sound one in a time of economic instability, it’s unclear whether this Budget will deliver the fuel to drive consumer spending as intended.
For small business owners and the workers of Australia, that means Labor’s Budget Response (stay tuned, Thursday night) will likely be followed more closely than in non-election years.