Strong stance on company tax plan welcomed
The Federal Budget confirmed the Government’s plan to fully implement its enterprise tax plan, which is needed for business to remain internationally competitive.
Chamber of Commerce and Industry WA (CCI) Chief Executive Officer Chris Rodwell welcomed the Government’s strong standing on the policy.
The policy would also help to increase trade for smaller business through the supply chain, Treasurer Scott Morrison said.
Personal tax relief
Low and middle-income earners will be better off, with the tax threshold for middle income earners increased from $87,000 to $90,000 a year – a saving of up to $530 per year for some workers.
Those earning up to $37,000 and paying 19 cents in the dollar will have their tax reduced by up to $200 a year.
For those earning more than $37,000, paying 32.5 cents in the dollar, their tax will be reduced by up to a maximum of $530 in a year.
Morrison said the measure meant middle income households, with both parents working, would be more than $1000 better off a year.
“There must be reward for effort,” he said.
For those over $90,000 the tax relief reduces to zero.
Morrison said measures would be put in place to ensure that pay rises and overtime did not get eaten up by higher tax rates.
By 2024-25, the 37 cents in the dollar tax bracket would be abolished.
Black Economy crackdown
The Federal Government said it expected to bring in $5.3 billion over the next four years by implementing the recommendations of its Black Economy Taskforce, which will target those who under report income.
The measures include outlawing large cash payments of more than 10,000 in the Australian economy.
“This will be bad news for criminal gangs, terrorists and those who are just trying to cheat on their tax or get a discount for letting someone else cheat on their tax,” Morrison said.
The Government will provide $318.5 million over the next four years to combat the black economy with an enhanced enforcement strategy, including ATO mobile strike teams, increased audit presence and a black economy hotline.
The Black Economy Taskforce will bring together government agencies through better coordination, information sharing and data analytics. This is expected to have a revenue gain of $3 billion over the forward estimates.
Harsher rules for R&D incentives
The Budget cracked down on research and development (R&D) tax incentives, with the government promising to sharpen its focus on additional eligible business R&D, while ensuring its ongoing fiscal affordability, including greater transparency.
The Treasurer said the move would save taxpayers around $2 billion over the next four years.
CCI’s Chief Economist Rick Newnham said the R&D tax incentive remained a critical part of the innovation lifecycle for business.
“It is essential that the Government maintains its commitment to supporting new ideas in business,” he said.
Meanwhile, crackdowns on multinationals had already brought around $7 billion a year in sales revenue by multinationals into government coffers, the Treasurer said.
“To support companies genuinely investing in R&D, we are refocusing the R&D tax incentive to give more support to companies that invest a higher proportion of what they spend in R&D, over and above what others would just do anyway,” Morrison said.