Budget 2018: Winners and Losers
Here’s how Scott Morrison’s 2018 budget lands for Australian businesses big and small.
Small business: The budget extended a tax break that allows small business owners to immediately deduct spending on eligible assets of up to $20,000. Streamlining of GST reporting for around 2.7 million small businesses expected to save them an average of $590 each per year.
Health care businesses: The government announced a $1.3 billion plan to support Australia as a “global leader” in medical technology, biotechnology and pharmaceuticals. It included extra funding for genomics research, clinical trials, and other medical research.
High-tech researchers: The budget included an extra $1.9 billion over 12 years on research “infrastructure” spanning industries including health care, manufacturing and agriculture.
Fintech firms: The government committed $44.6 million in spending to establish a “consumer data right,” to allow consumers to access and transfer their data between service providers. The progress will be welcome news to financial technology or “fintech” businesses, as financial services has previously been identified as the testing ground for open data.
Craft brewers: Beer sold in the smaller kegs preferred by micro-brewers will be taxed at the lower rate which applies to kegs larger than 48 litres. Craft brewers have complained they are currently operate at an unfair disadvantage to multinational giants. All brewers and distillers will benefit from an increase in the refund they can claim on the excise they pay, from $30,000 to $100,000.
Companies “pushing the boundaries” on R&D tax claims: The government is cutting $2.4 billion from its research and development tax incentive scheme, to ensure the funding goes to genuinely innovative spending.
Life insurers targeting the young: The government will require super fund members to “opt in” to buying life insurance if they are under 25, have a balance of less than $6,000, or have not made a contribution for 13 months. It estimated about 5 million people would have the opportunity to save $3 billion on insurance premiums.
Superannuation funds: Super funds will also be banned from charging exit fees when members want to leave the fund. The ATO will start proactively hunting down inactive super accounts and reuniting them with their owners’ active funds, stemming the flow of fees super funds earn from inactive accounts.
Private health care providers: $130 billion in funding for public hospitals over five years from 2020 will hurt private hospital operators like Ramsay Health Care and Healthscope by ensuring public hospitals are a “viable alternative”, according to Credit Suisse analysts. A further crack down on unnecessary tests will hit diagnostics providers such as Primary Health Care.
Profit-shifting multinationals: Multinational companies will be stopped from shifting profits to lower-taxing countries by loading up local operations with debt, saving the budget $240 million over four years.
Black economy operators: The Australian Tax Office’s enforcement budget for reining in the black economy will be beefed up. The ATO will carry out more audits, form “mobile strike teams”, improve its data analytics and set up a “Black Economy Hotline” for the public to report suspicious activity. Cash payments will be capped at $10,000 to limit the ability of black economy businesses to avoid paying tax.
Construction firms: For all the talk of new infrastructure in the lead-up to the budget, there is no new money in the budget for these or any other projects. Infrastructure Partnerships Australia’s chief executive Adrian Dwyer said it was “concerning” that the budget “cut real infrastructure funding by $2 billion over the forward estimates”.
Big pharma: The government will spend $302 million over four years to improve access to generic and biosimialr medicines.
Online hotel booking sites: GST will be applied to offshore hotel booking websites, such as Expedia and Booking.com, so they are taxed the same as Australian businesses. The Australian Chamber – Tourism said it was pleased by the move to “tackle the inequity” that existed between international and local booking providers.