Budget wrap up for business

Budget wrap up for business

Like most Australians, you are probably sick and tired of hearing about this year’s budget. It has been a trending topic print, radio, social and televised media in the last couple of weeks.

Amidst all the commentary, it can be difficult to know exactly what the budget means for Australian business. In order to provide some clarity, the team at Sync or Swim has put together a brief on how the budget will impact Australian business operations.

Superannuation

From 1 July 2014, compulsory employer superannuation contributions will rise from 9.25% to 9.5%. This measure is a continuation of the measured announced by the previous government in the 2008/09 budget. As this increase has been government policy for six years, business owners and managers out there should have accounted for this increase in their annual budget.

However, the 2014/15 budget will delay further increases in the compulsory employer superannuation contribution, which were due to be implemented annually through until fiscal 2020. The proposed changes, if passed in parliament, will mean the next increase in compulosry employer contributions will not take effect until 2018/19, as shown in the table below. 

Year

Employer contributions - current law

Employer contributions -proposed in the 2014 budget

2013/2014

9.25%

 

2014/2015

9.5%

9.5%

2015/2016

10%

9.5%

2016/2017

10.5%

9.5%

2017/2018

11%

9.5%

2018/2019

11.5%

10%

2019/2020

12%

10.5%

2020/2021

12%

11%

2021/2022

12%

11.5%

2022/2023

12%

12%

Company Tax rate reduction

The 2014/15 budget kept the government's commitment to reduce the corporate tax rate from 30% to 28.5%. However, this commencement of this measure had been delayed until 1 July 2015. Whilst this change provides a productive incentive for Australian businesses, for companies with a taxable income above $5 million, the decrease in corporate tax will be offset by the 1.5% levy for the Paid Parental Leave scheme, which will also take effect from 1 July 2015. Taxation on sole traders will remain unchanged.

Incentives for businesses who employ workers over 50

Under a new budget measure, the government will provide assistance in the form of a $10,000 grant to businesses which employ a worker who is over the age of 50 who has been out of work for 6 months of more. The assistance will be provided in installments over two years. There will be no restrictions placed on how the grant must be spent. If a business employs an eligible employee on a part time basis, the assistance will be provided pro-rata.

Indexation of the fuel excise

The fuel excise has been frozen at 38.1 cents per litre since 2001. However, from 1 August 2014, excise will indexed every six months to the Consumer Price Index (CPI).

This basically means that the fuel excise will be increased every six months in line with CPI, which roughly approximates inflation.

This change will place a significant burden on businesses for which fuel is a significant operating expense. Agriculture and transport based businesses will be hit hardest, although it is expected that increased operating costs will largely be passed on to consumers via increased prices at the checkout.

Concession loans for Australian Apprentices

The government also announced in the budget that it would provide loans of up to $20,000 on concessional rates to help apprentices with costs of living, tools and transport whilst completing their apprenticeships.   

Article by: Paul Bright, Business Development and Compliance Specialist.