2018/19 Budget - How does it affect my Business?

May 8, 2018

This budget contained virtually nothing for business with the one exception being the extension, by one year, of the immediate asset write off that was due to expire in June 2018. There were however several nasty compliance traps announced.

Extension of Immediate Asset Write Off

Businesses with turnover under $10 million can continue to immediately claim as a deduction the cost of eligible depreciating assets purchased prior to 30 June 2019 for less than $20,000.

Removal of Tax Deduction on Employee and Contractor Expenses if Tax is not Withheld

From 1 July 2019 if your business either:

  • pays wages to an employee but doesn't withhold any PAYG from these payments, despite the PAYG Withholding requirements applying or
  • pays a contractor for services who does not quote their ABN and you do not withhold any amount of PAYG

then no tax deduction will be allowed for the payment to that employee or contractor.

Sometimes businesses omit paying PAYG for employees who would not otherwise be taxable or for business owners but under this measure, it will be important to withhold PAYG correctly in these circumstances to ensure a tax deduction can be obtained for your business.

Cash Payment Limit

From 1 July 2019, businesses will not be able to accept cash payments greater than $10,000 for goods and services.

Extension of Reportable Contractor Payments System

The list of industries required to report contractor payments annually to the ATO will be expanded to include security providers and investigations services, road freight transport and computer system design from 1/7/19. This system already applies to the building industry and will commence applying to the cleaning and courier industries from 1/7/18, creating a further compliance burden on businesses in these industries.

Extension of Director Penalty Regime

The director penalty regime currently applies to make directors personally liable for their Company's outstanding Superannuation and PAYG debts where the Company is unable to pay in certain circumstances. This is to be extended to outstanding GST, luxury car tax and wine equalisation tax debts.