This is the budget that we had to have. The deficit will need to be reigned in, and given that we have a Labor Government, there is some pain to be felt by small businesses.
I am going to ignore all the headline stuff. Budget deficit of blah, blah, blah; jobs, jobs, yawn; lets look at the stuff that will affect small businesses.
Self Managed Superannuation Funds (SMSF)
I have about a dozen clients with SMSF. There is a $30 increase in the annual levy to $180. If you don't have one, but want to start one, things have just got a little bit harder. Auditors will also need to lift their game, which will result in higher annual audit fees for these funds. There will also be a tightening of the administration requirements for trustees.
See more here with Fairfax.
There has been some good news, with some adjustments to unintentional concessional superannuation contributions.
Private Use of Business Owned Motor Vehicle
This was announced a couple of days ago and I think that the thought behind this change is fundamentally flawed. In effect it forces those business that provide motor vehicles to their employees for business use to insist that log books be kept. Fail to have those log books and the cost of having those cars will increase, both in GST and in Income Tax. For some business, it may mean a rethink as to whether or not those cars are kept in the business. Here is one view of the changes. Here is another.
Motor Vehicle Tax Write Off
As a bit of a trade off, any business purchasing a motor vehicle in 2012/2013 will be able to claim an immediate $5,000. I think this sounds better than it actually is, as explained here. I'll wait for the detailed legislation to come out before jumping for joy over this.
Entrepreneurs Tax Offset and Change to PAYG Calculations
This will disappear in the future. This sounds bad, but in reality this was only able to assist a relaively small number of legitimate businesses. Given that the Gross Income threshold was $75,000 it meant that it was not assisting those businesses looking at growing.
There are also changes to the way PAYG instalments are to be calculated. This is another announcement that sounds good but means little. PAYG is just a prepayment of tax. At the end of the year it doesn't change the amount of tax calculated by one cent. It just changes the timing of the payment of that tax. Yawn.
Read more here.
Picture of Scary Opposition Treasury Spokesman (AKA Shrek)
Crackdown On Income Directed to Children
This is a bit of a pain in the arse for those clients that operate a family trust and use that trust to distribute income to kids. This budget has reduced the effectiveness of distributions to kids and comes into play from July 1 2011. More here
Extra Funds to the ATO for Audits
This is painful, not because any clients are doing the wrong thing, but because this will mean the tax office will be wasting more of my time chasing up on information to satisfy audits, meaning higher fees by me.
I think we will be reintroducing tax audit insurance for all out clients as the likelihood of audits taking place has increased. More here.
Family Tax Benefits
A raft of small changes here meaning that many families will either have small wins or small losses, depending on their individual circumstances.
Income Tax Cuts
There are none. First time in a long, long while.
Yeah, the Government needed to be seen to be doing stuff to to reduce the deficit. Whether anything substantial will be achieved with these measures is debatable. Whether this will get the budget back into surplus is also debatable.
Will the oppostion complain about the budget? Yes, that's why they are there. Will it do any good? No. They're not supposed to.
Thank you. Return to your lives now.