The Budget 2017-18 has not focused greatly on corporate taxation, however items in the Budget which may impact the corporate sector include:
- The extension by 12 months of the instant write-off for small business entities on plant and equipment costing less than $20,000 (for further details see our SME commentary);
- Introduction of a levy for businesses who use certain skilled migrant visas;
- Expansion of the taxable reporting system to payments made to contractors in the courier and cleaning industries.
The Government did make mention in the Budget paper of its intention to continue with its plan of reducing the company tax rate for all companies to 25% by 2026/27 as part of its “Ten Year Enterprise Tax Plan”. It acknowledges that Australia’s corporate tax rate is one of the highest of the OECD countries and if not changed, there will be significant impact on the competiveness of Australian businesses and their ability to attract foreign investment.
For information on international tax changes which will impact corporates with turnover in excess of $1 billion, please refer to our International commentary here >>
To further support the position of encouraging Australian businesses to hire local talent, from March 2018 businesses that employ foreign workers on certain skilled visas will be required to pay a levy which will support the proposed “Skilling Australians Fund”. The levy payable will be as follows:
- For businesses with a turnover of less than $10 million the levy will be $1,200 per visa per year for each employee on a Temporary Skill Shortage Visa and they will be required to make a payment of $3,000 for each employee being sponsored for a permanent Employer Nomination Scheme visa (subclass 186) or a permanent Regional Sponsored Migration Scheme visa (subclass 187);
- For businesses with a turnover of more than $10 million, the above amounts increase to $1,800 and $5,000 respectively.
The Skilling Australians Fund
The “Skilling Australians Fund” will support skilling Australian workers and prioritise apprenticeships and traineeships for occupations in high demand, occupations with a reliance on skilled migration pathways, industries and sectors of future growth and trade apprenticeships in regional and rural areas. Such support will benefit the wider Australian economy not just those operating through a company structure.
Taxable payments syStem
The taxable payments reporting system, which currently applies to the building and construction sector, will be expanded from 1 July 2018 to include contractors in the cleaning and courier industry. This measure is aimed at improving tax compliance within the sector and businesses will be required to report payments made to these contractors to the Australian Taxation Office (ATO). Businesses will need to ensure they collect the relevant information from their contractors from 1 July 2018 with their first reporting obligation under this system required in August 2019.
Combatting fraud in the precious metals industry
The Government has been concerned about GST fraud in the precious metals industry for some time. In recent times, some people have been prosecuted for their part in this fraudulent behaviour.
In an effort to overcome this, the ATO initially sought to amend their interpretation of the GST law by reading into it words that were not there. This was met with protests from the tax advisory sector, and the interpretation was removed. The changes set out in the Budget were subsequently announced on 31 March 2017 and take effect from 1 April 2017. The ATO has already been working with industry to ensure they understand their obligations.
The changes provide that entities buying gold, silver and platinum, that have been supplied as a taxable supply for GST purposes, will be required to apply a reverse charge — they will remit the GST to the ATO instead of the seller. Changes are also made to clarify that gold, silver and platinum are not second‑hand goods.
Another example of the reverse charge arrangements is to try to overcome perceived fraudulent behaviour.