The Australian Government handed down the 2019-20 Federal Budget on Tuesday night. The Budget was significant in that it forecast the first national surplus in more than a decade, hopefully contributing to a lift in consumer sentiment and increased household spending in the near term to stimulate the economy.

All in all, the 2019-20 Budget is a very positive one with the Morrison Government proposing to use part of the surplus to pay down national debt and the remainder to increase economic growth. When considered from a business perspective, the 2019-20 Budget includes four key actions to increase economic growth, namely:

  • Increasing the disposable income of those who need it most via the delivery of tax offset payment for those earning up to $90,000. This payment will be made to around 10M Australians when they submit their 2018-19 tax return. The nature of this payment is one that is designed to provide middle income Australians with an increased 2018-19 tax refund that can be used to immediately stimulate increased consumer spending.
  • Investing in workforce skills and business innovation to ensure that our employees have skills that are relevant in a workplace that is continually being reshaped by technological and digital disruption.
  • Improving national infrastructure to improve passenger and freight efficiency so that businesses can receive and transport goods at the lowest possible cost and maximum service level for our customers.
  • Continuing to help small business grow and invest by increasing the instant asset write-off (in both quantum and eligibility) and fast-tracking tax cuts for all small businesses earning up to $50M per year.

“The 2019-20 Budget is a good one for taxpayers and small to medium businesses but, as we all know, the implementation of this particular Budget will be dependent upon the outcome of the upcoming Federal election – with one very important exception”, said ACAPMA CEO Mark McKenzie.

The changes to the instant asset write-off announced on Tuesday night are not dependent on the Federal Election. This concession was made available immediately following completion of the Federal Treasurer’s Budget address on Tuesday night, 2 April 2019.

This means that businesses with annual turnover of up to $50M can purchases business assets of up to $30,000 in value and then and write this investment off against their 2018-19 tax return. There is no limit to the number of investments that can be made.

“The increase of eligibility for businesses with turnover of up to $50M – up from the previous $10M threshold – is very pleasing”, said Mark.

The result reflects ACAPMA’s calls on the Federal Government for the annual revenue threshold for eligibility to be increased, given that many small businesses like service stations operate on a high revenue-low margin basis and have been unfairly missing out on past concessions.

“The increase in the threshold is a major win for businesses in the fuel retail industry and has come, at least in part, through the combined advocacy efforts of ACAPMA and the Council of Small Business Organisations of Australia over the past 12 months”, said Mark.

Businesses wishing to take advantage of the new Instant Asset Write-off can do so between now and 30 June 2019. As with any investment, such action should only be taken after due consideration of the current financial position of your business and/or provision of professional accounting advice.

“The fact that the Federal Budget was delivered one month early means that business owners now have more time to consider the merits of a new investment relative to their forecast 2018-19 pre-tax profit”, said Mark.