Federal Budget Update – Small Business Entities

In case you missed it in the Budget 2018-19…make sure that your wages bill is tax deductable.

The Federal Budget contained a number of business tax initiatives, some beneficial and some with a potential sting.

The good news

On the benefit side the instant asset write-off for small capital items has been extended. Small business entities (SBEs) with aggregated annual turnover of less than $10 million will be entitled to claim as deductions capital purchases not exceeding $20,000 for a further 12 months until 30 June 2019.

SBEs that have the cash flow to make these equipment purchases will benefit from a lower tax bill in the year they make the purchase.

The bad news

A potentially costly amendment for businesses that use small contractors, is a provision aimed at cutting down the cash economy. The proposed provision will put the onus on businesses to make sure that all subcontractors provide an ABN. If passed into law, tax deductions for contractors’ payments may be denied unless the business has withheld PAYG from the payment when a contractor fails to provide an ABN.

Deductions will also be denied for wages if businesses do not withhold and remit PAYG when there has been a requirement to do so. This is an added burden on a business over and above the existing penalties for not properly accounting for PAYG, effectively using good businesses to police the cash in hand contractors.

For more information and a confidential chat please contact partner Greg Mohen on 08 9321 3755.

The information published in this paper is of a general nature and should not be construed as legal advice. Whilst we aim to provide timely, relevant and accurate information, the law may change and circumstances may differ. You should not therefore act in reliance on it without first obtaining specific legal advice.