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Federal Budget 2019 – changes for Australian businesses

Posted by: The ADP Team on 9 April 2019 in Budget, Legislation, Tax

Thank you to our guest blog, Tax & Super Australia.

A new Federal Budget brings about changes for Australian businesses. The Treasurer Josh Frydenberg’s first budget, released on 2 April, 2019 is no exception. Our guest writer from Tax and Super Australia has distilled and simplified the budget details for business owners and finance professionals.

Instant asset write off increased and expanded

The instant asset write-off threshold will be increased from $25,000 to $30,000 from Budget night to 30 June 2020. The threshold applies on a per asset basis. As a result, eligible businesses can instantly write off multiple assets costing less than $30,000 that are first used, or installed ready for use.

The instant asset write off will also be expanded to apply to both “small businesses” (those with an aggregated annual turnover of less than $10 million) and medium sized businesses (an aggregated annual turnover of $10 million or more, but less than $50 million).

Continuation of pooling arrangements for other assets

Small businesses can continue to place assets which cannot be immediately deducted into the small business simplified depreciation pool and depreciate those assets at 15% in the first income year and 30% each income year thereafter.

The pool balance can also be immediately deducted if it is less than the applicable instant asset write-off threshold at the end of the income year (including existing pools). The current “lock out” laws for the simplified depreciation rules (these prevent small businesses from re-entering the simplified depreciation regime for five years if they opt out) will continue to be suspended until 30 June 2020.

Medium sized businesses do not have access to the small business pooling rules and will instead continue to depreciate assets costing $30,000 or more (which cannot be immediately deducted) in accordance with the existing depreciating asset provisions of the tax law.

Small businesses will still be able to immediately deduct purchases of eligible assets costing less than $25,000 that are first used or installed ready for use over the period from 29 January 2019 until Budget night (under the increase in the instant asset write-off threshold from $20,000 to $25,000 announced on 29 January 2019).

ABN obligations and the black economy

The government will make changes to the Australian Business Number (ABN) system to “disrupt black economy” behaviour by requiring ABN holders:

  • from 1 July 2021, with an income tax return obligation, to lodge their income tax return; and
  • from 1 July 2022, to confirm the accuracy of their details on the Australian Business Register annually.

Currently, ABN holders are able to retain their ABN regardless whether they are meeting their income tax return lodgement obligation or the obligation to update their ABN details.

According to the government, these new conditions will make ABN holders more accountable for meeting their obligations, while minimising the regulatory impact on businesses doing the right thing. Failure to comply will mean losing registration.

Luxury car tax increased refunds for primary producers and tourism operators

The government will provide relief to farmers and tourism operators by amending the luxury car tax refund arrangements. For vehicles acquired on or after 1 July 2019, eligible primary producers and tourism operators will be able to apply for a refund of any luxury car tax paid, up to a maximum of $10,000. It used to be $3,000.

The eligibility criteria and types of vehicles eligible for the current partial refund will remain unchanged under the new refund arrangements.

Delayed amendments to Division 7A

The government will defer the start date of the 2018-19 budget measure “Clarifying the operation of the Division 7A integrity rule” from 1 July 2019 to 1 July 2020.

The government issued a consultation paper in October 2018 seeking stakeholder views on the proposed implementation approach for the amendments to Div 7A.

Delaying the start date by 12 months will allow additional time to further consult with stakeholders on these issues and to refine the government’s implementation approach, including to ensure appropriate transitional arrangements so taxpayers are not unfairly prejudiced.

To find out more about the Federal Budget, visit our articles on each of these topics:


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