Governance, Risk & Compliance: GRC
6 Ways The 2018-19 Federal Budget Benefits Tradies
Here are 6 ways the government’s spending will affect your trade business this 2018-19 financial year.
This post outlines the government's priorities and intentions for the nation for the coming financial year and beyond. It focuses on the impact to one of the key economic sectors of the country: tradies.
1. Lower taxes with Ten Year Enterprise Plan
The 2018-19 Federal Budget introduces a $530 tax cut for tradies and other Australians earning between $48,000 to $90,000. Also, from July 1 2018, if you're a tradie earning more than $87,000, you'll be happy to know the 32.5% tax bracket has been lifted from $87,000 to $90,000. This means you'll now be paying less tax if you earn over $87,000.
According to the ATO, the general tax rate is proposed to gradually decrease further, right down to 25% in 2026-27.
If you're an ambitious tradie who is focused on growing your customer base and aiming to increase your revenue each year, the tax reductions are beneficial to you.
2. Extension of $20,000 instant asset tax write-off
Tradies can enjoy lower taxes for the upcoming financial year with the continuation of the $20,000 tax write-off initiative. When you purchase many types of assets to run your trade business, and the cost is less than $20,000, this expense is tax deductible within your tax return. Which means that instead of receiving the depreciation benefits over time for that asset, you'll end up with more money in your pocket sooner.
This simplifies things for you at tax time, as purchases such as vehicles, equipment, machinery, furniture and tools will no longer have to be deducted over a number of years.
3. New limit on cash payments
A new limit on cash payments is being introduced, to prevent undeclared cash payments being made or received by business owners. Trade business owners and all other businesses will be limited to making or accepting a maximum of $10,000 in cash payments starting from July 1 2019.
4. Crackdown on illegal “phoenix” activity
To discourage 'phoenix' activity within small businesses new rules have been introduced to help prevent business owners from taking advantage of staff and/or other entities. Common activities include not paying bills or employees wages when the business goes bust, only to operate again under a new business identity.
It's about business owners being held accountable for the debts they incur when they go out of business.
5. More apprenticeship funding
The government is investing $250 million in the Skilling Australians Fund, which will provide more funding for apprenticeships and traineeships to help encourage growth in key sectors. With more tradespeople entering the workforce, there'll be more candidates to choose from when growing your own team.
6. Improving roads and infrastructure
As a tradie, you're frequently on the road in your work vehicle. It's likely that you experience delays from being stuck in traffic and other related issues that could impact everyone's safety.
$4.2 billion dollars will be spent on Australian roads. $1 billion will specifically go towards improving congestion on our busy roads. The funding is part of a larger initiative to invest $75 billion into roads as a 10 year rolling infrastructure plan.
Overall, there a few good benefits for tradies in this budget.
Handy tip: with so many transactions involved in trade businesses, it's easy to forget which ones you can claim in your tax return. Remember to include other assets like professional libraries when claiming for tools and equipment.
The new Wiring Rules AS/NZS 3000:2018 is here. Order now or visit www.saiglobal.com/wiringrules.