What accountants can expect under a Liberal government
A Liberal government means that the cap on deductibility of accountants’ fees is now off the table.
Scott Morrison’s Liberal government declared victory in the federal election on Saturday, in a surprise win over the Labor Party.
ScoMo's campaign, which included tax cuts and a focus on strengthening the economy, won him the vote as Labor’s reform roadmap fell short despite several polls predicting Bill Shorten would be the country’s new Prime Minister.
Over the next three years, accountants in the small business space can expect the following changes:
Instant asset write-off
The instant asset write-off cap will be lifted to $30,000 and extended out until 30 June 2020.
Under the new legislation, medium-sized businesses with an annual turnover of less than $50 million have also been added to the scheme, reportedly covering an additional 22,000 businesses employing 1.7 million Australians.
The government earlier pledged to cut taxes for “hard-working Australians” by more than doubling the low- and middle-income tax offset.
Low- and middle-income earners will receive a benefit of up to $1,080, that's up to $2,160 for a dual income family. Taxpayers are hoping to access the offset after they lodge their end of year tax returns from 1 July 2019.
The Institute of Public Accounts (IPA), however, warned in April that although some of Australia’s unincorporated small businesses may welcome the news of personal income tax cuts, many will not reap the benefit this year.
"The current low- and middle-income tax offset has in effect been increased from $550 to a new maximum of $1,080 but only for those within the income bracket level of $48,000 to $90,000. Those beyond this bracket will be waiting until 2024-25," IPA's CEO Andrew Conway said.
Mr Morrison committed to the creation of 250,000 new small and family businesses over the next five years, by providing $100 million in funding and partnering with financial institutions to create a small business investment fund.
The fund will aim to expand to $1 billion as it matures.
More recently, the PM promised to establish a new Manufacturing Modernisation Fund, to support manufacturers making the transition to digital technologies.
Levelling the playing field
The Morrison government has also pledge to give small businesses a fairer go when dealing with larger businesses.
Reforms in this direction include:
- Reforms to competition policy to prevent big businesses abusing their market power;
- New unfair contract legislation to protect small business;
- Free, fast and binding dispute resolution under the new Australian Financial Complaints Authority;
- Stronger enforcement to combat illegal phoenixing activities;
- An advocacy voice in the Australian Small Business and Family Enterprise Ombudsman.
A majority said that business will essentially remain unchanged under a Liberal government.
"Should the Liberal government be re-elected it will largely be business as usual," said Kylie Parker, director at Lotus Accountants.
In the lead up to the election, accountants were particularly worried by Labor's proposal to cap the deductibility of accountants’ fees. During his campaign, Bill Shorten went so far as to liken the deductibility of tax agents’ fees to a “rort”, firing up the profession and sending them into a lobbying spree.