Treasurer Wayne Swan delivered the Federal Budget last night. Normally the Growthwise team spend the night posting updates on twitter and our Growthwise Facebook Page, reading through all the papers and getting ready to advise our clients what the budget means for them. Unfortunately the budget was extremely light on for small business.
Now clearly our focus is skewed towards the small business sector and self funded retirees and realistically the budget delivered little if anything for this sector. Plastered all over the papers this morning are headlines such as Oi, Mr Swan, what about us and certainly one of my favourites Budget 2013: Keep calm and carry on. The talk again is about things that won't have an impact on the majority of the 2.2 million small businesses in Australia.
The change to pay PAYG Tax Monthly won't affect many Small Businesses. You need to have a turnover greater than $20 million or more before you will be required to pay your tax instalments monthly...and note this won't come into effect until 1 January 2017!
So what are you going to be required to pay:
- Medicare Levy is increasing from 1.5% to 2.0% from the 1st July 2014. So if your taxable income is $80,000 for the year you will pay an extra $400 for the year
- Self Education Expenses deductions are being capped at $2,000 for the year. Note this is to start 1 July 2014.
- Net Medical Expenses Offset are being phased out. Basically you need to claim this offset in this Financial Year to be eligible to continue to claim the offset in future. Have 1 year where your out of pocket medical expenses are under the threshold (currently $2,000) and you can no longer claim this offset.
- Superannuation funds paying pensions will no longer have all the earnings tax free. Instead earnings over $100,000 per member will be taxed at 15%. The logistics of this will potentially be a nightmare so we will provide more of an update when the detail comes through.
- On Superannuation don't forget you need to pay 9.25% Super Contributions not 9% from the 1st July.
- Baby Bonus is being scrapped...but the Family Tax Benefits payments will be increased by $2,000 for the 1st child and $1,000 for each child thereafter. The change is means tested. Note this comes into effect on the 1st March 2014
- Discounts applying to up-front payments for HELP will be removed from 1 January 2014
- 457 visa applications are increasing from $455 to $900 from July 1 2013
The other parts....
Superannuation Contribution Limits remain the same with the exception of those aged over 60 who for the 2014 Tax Year who can now contribute $35,000 as a concessional contribution.
Tax Rates will remain the same.
| Taxable income threshold range ($) | 2013-14 marginal tax rate (%) |
|---|---|
| 0 - 18,200 | 0 |
| 18,201 - 37,000 | 19 |
| 37,001 - 80,000 | 32.5 |
| 80,001 - 180,000 | 37 |
| 180,001 + | 45 |
Don't forget you won't get the Private Health Insurance Rebate if your taxable income is above $130,000. You only get the 30% rebate if your taxable income is less than $84,000.
$77.8 million has been earmarked over 4 years for the ATO to improve compliance by expanding the data matching systems. And we are to expect more upfront checks for start-ups registering ABN's.
The few things we think will be good for SME's
- $350 million has been set aside for a new Innovation Investment Fund to boost innovation and entrepreneurial activity
- Enterprise Solutions program given $29.4 million over the next 4 years. This will help SME's in bids for government contracts
- $7.2 million has been set aside to help SME's take advantage of the online economy
- $3.2 million over 15 years has been earmarked for the promotion and marketing of Australian start-up success stories.
In summary the vision for Australia competing on a worldwide stage seems to be missing. I guess the good news out of the budget is for many SME's nothing is set to change!
