Taxation - Business

$20,000 instant asset write-off extended
The Government has proposed to extend the instant asset write-off for business assets up to $20,000 until 30 June 2019. This measure was originally introduced in the 2015/16 Budget and was due to expire at the end of this financial year.

This measure allows businesses with an aggregated turnover of less than $10 million to immediately deduct purchases of eligible assets costing less than $20,000.

Goodwin Chivas & Co Commentary
This measure will continue to improve cash flow for small business by the ability to claim a higher amount of deduction on purchasing eligible assets.

Removing Tax Deductibility of non-compliant payments to employees and contractors
To address the problem associated with the black economy, the Government will introduce the Black Economy Package including the removal of tax deductibility of non-compliant payments.

Under this measure, from 1 July 2019, business will no longer be able to claim tax
deductions for payments to their employees where they have not withheld any amount of PAYG even though PAYG withholding requirements apply.

The Government will also remove deductions for 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.

Goodwin Chivas & Co Commentary
From 1 July 2019, businesses need to ensure they meet the PAYG obligations when making payments to employees and contractors to be able to claim a deduction on these payments.

Disallowing Deductions for Vacant Land
From 1 July 2019, the Government will deny deductions for expenses associated with holding vacant land. This is an integrity measure to address concerns that deductions are being improperly claimed for expenses (such as interest costs) related to holding vacant land, where the land is not genuinely held for the purpose of earning assessable income.

The denied deductions will not be available to be carried forward in future years, although capital expenses could still be added to the cost base of a property.

Deductions will not be impacted when they are incurred after construction has commenced or the land has started being used for a business.

Goodwin Chivas & Co Commentary
An integrity measure which should further discourage 'land banking' or similar practices.


Excise Changes to Benefit Small Brewers

Currently, draught beer sold at licensed venues such as pubs and clubs in individual containers exceeding 48 litres is taxed at lower rates compared with beer sold in individual containers up to and including 48 litres. However, the lower rates mainly benefit large breweries, which typically use 50 litre kegs. Extending the concessional draught beer excise rates to 8 litre or greater kegs will allow craft brewers, which typically use smaller sized kegs, to also benefit from the lower rates, levelling the playing field between craft and large breweries


Goodwin Chivas & Co Commentary

Enjoy a cheaper craft beer at your local establishment courtesy of Scott Morrison.


If you have any questions about these measures, please contact your client manager to discuss.


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