The Key Budget Measures Business Leaders Should Know About

Treasurer Wayne Swan’s sixth Federal Budget contained some wins for small firms, and big clamp down on tax structures exploited by big business.

So while a chief executive or two might be cursing changes that stamp out their favourite tax loopholes – described by Treasury as “design flaws” – several measures in the budget are set to make things easier for Australia’s small-to-medium companies.

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Tonight, Swan revealed he hopes to raise $4.1 billion over four years by fixing vulnerabilities in Australia’s corporate tax system, through a series of measures that address abuses “that take advantage of design flaws, vulnerabilities and unexpected interactions in the corporate tax law from changes made in the early 2000s.”

At the same time, he pulled the curtain back on a $378 million investment to encourage innovation from entrepreneurial start-ups, a $238.4 million spend on innovation precincts and changes to research and development tax incentives that mean they will only be available to companies with annual aggregate (Australian) turnovers of less than $20 billion.

Also thrown in were changes to pay-as-you-go income tax instalments, and a boost in funding for the ATO, so it can chase up more tax money for The Government.

Here’s what else business leaders need to know:

  • The Government is providing $7.8 million over five years in grants for Australian business organisations to improve links with Asia
  • Direct trading between the Australian dollar and the Chinese renminbi
  • Any project in Australia worth more than $500 million must include an Australian Industry Participation Plan, which the Government said would mean more firms win work at home
  • Small and medium sized businesses and start-up companies will also be provided with more assistance and access to finance through the $378 million Venture Australia package to stimulate Australia’s venture capital market
  • The Government will be investing more than $500 million to establish up to 10 “innovation precincts” around Australia
  • It is also taking immediate action to address base erosion and loopholes in Australia’s corporate tax system, which stamp out “dividend washing” as well as a host of other crafty tax measures employed by big business
  • Changes to research and development tax incentives will mean they will only be available to companies with annual aggregate (Australian) turnovers of less than $20 billion. The R&D tax incentive will provide a 45% refundable tax offset to eligible companies with annual aggregate turnover of less than $20 million and a 40% non-refundable one for everyone else.
  • The ATO will get additional resources to expand data matching with third party information. This is expected to increase tax receipts by $217 million over the forward estimates period
  • Trust structures will also be scrutinised, with the ATO to receive more funding for that as well, which is expected to boost revenue by $217 million over the period.
  • The make pay-as-you-go (PAYG) income tax instalment requirement has been extended to include trusts, superannuation funds, sole traders and large investors. This measure is expected to raise $1.4 billion over the four years to June 2017
  • $24 billion will be spent on road, rail and ports in Australian cities and regions over the next 6 years

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