1. Extending The $20,000 Instant Asset Write-Off By Another 12 Months
The government will extend the current $20,000 instant asset write-off available for small business entities (i.e. businesses with an aggregated turnover of less than $10 million). Small business entities will now be able to immediately deduct the cost of most new or second hand depreciating assets bought and used (or installed ready for use) in the business before 30 June 2019 – provided the asset costs less than $20,000. Only a few assets are not eligible (such as horticultural plants and in-house software).
Whether GST should be included in working out whether the threshold is met depends on whether the purchaser is registered for GST or not
- If the purchaser is registered for GST – the GST exclusive amount is the cost of the asset; and
- If the purchaser is not registered for GST – the GST inclusive amount is the cost of the asset.
However, assets costing $20,000 or more can be pooled in a general small business pool, treated as a single depreciating asset and depreciated at:
- 15% for such assets acquired in the first income tax year; or
- 30% each income year thereafter.
If the balance in the pool is less than $20,000, the pool can be immediately deducted.
From 1 July 2019 the immediate deductibility threshold will revert to $1,000 (as opposed to the current $20,000).
2. Introduction of Economy-Wide Cash Payment Limit
From 1 July 2019, the Government will introduce a limit of $10,000 for cash payments made to businesses for goods and services. Currently, undocumented cash payments are used to evade tax and to launder money derived from criminal activity. To ensure a transparent audit trail is retained for large payments, the Government has proposed from 1 July 2019 a $10,000 limit for cash payments made to businesses. Payments in excess of the $10,000 limit will only be permissible by electronic transfer (e.g. direct debit, BPAY, PayPal) or by cheque.
The restriction will not apply to transactions involving financial institutions e.g. banks, nor will it apply to consumer to-consumer non-business transactions.
3. Further Expansion of Taxable Payments Reporting
Currently, under the Taxable Payments Reporting System (TPRS), businesses in the building and construction industry are required to report payments to contractors to the ATO. These measures were introduced to target the ‘black’ or cash economy and are designed to reduce the incidence of tax evasion by contractors. The 2017 Budget extended the TPRS to the cleaning and courier industries with effect from 1 July 2018. From 1 July 2019 the Government has proposed to expand the TPRS to include businesses in the following industries:
- Security providers and investigation services;
- Road freight transport; and
- Computer system design and related services.
Businesses will be able to report the payments to the ATO via an online portal.
4. Removing Tax Deductibility of Payments Where Withholding Obligations Not Met
From 1 July 2019, businesses will no longer be able to claim a deduction for the following payments:
- Payments to their employees such as wages where they have not withheld any amount of PAYG from these pay-ments (i.e. despite the fact the PAYG withholding requirements apply).
- Payments made by businesses to contractors where the contractor does not provide an ABN and the business does not withhold any amount of PAYG (despite the withholding requirements applying).
