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Last night the Treasurer, Scott Morrison, handed down his latest budget.

Amongst the winners and losers, how did tradies fare in this year’s budget?

We’ve broken it down to let you know the good and the bad for tradies and anyone in the building and construction industry.

Saving Money

Instant asset tax write-off

This was a great thing for tradies and small business owners introduced last year, and it’s now been extended for another 12 months to June 2018.

This scheme allows businesses with turnover of less than $10 million to instantly write-off assets purchased for less than $20,000.

It doesn’t mean you’re able to get a higher deduction overall, but it does mean you can claim the full amount in the first year, rather than depreciating the asset over a number of years.

Ultimately it means having cash back in your pocket sooner when purchasing new gear for your business, which is a great thing.

Originally this scheme was only available to small businesses with turnover of less than $2 million, but it has since been increased to $10 million.

Result: WIN.

Company tax cuts

This isn’t something new, but it was reaffirmed in last night’s budget.

If you run your trade business via a company structure, you’re set for a tax cut.

For companies with turnover up to $10 million, in the 2016-17 financial year your tax rate will be 27.5%

The long term plan is for the rate to reduce to 25%, but this will take another decade to happen.

Many tradies run their business as a sole trader, and thankfully you guys don’t miss out.

Sole traders will receive an 8% reduction to their tax rate this year, up from 5% last year.

The saving is capped at $1,000 per year, so it’s not life changing, but the money’s better off in your pocket than the Governments.

Result: WIN.  A small one, but we’ll take it.

Medicare tax increase

Most of us working for a living pay the Medicare levy of 2%.

From the 2019 financial year this will increase to 2.5% for everyone earning more than $21,655.

No one likes a tax hike, so this one is definitely a loss.

Result: LOSS.

Cutting red tape

The treasurer talked about cutting red tape for business, but didn’t really elaborate on what could be done.

Any business owner will tell you how much they hate government red tape, so this has to be a win at this stage.

Result: WIN.  Even though we don’t really know what will change…

Funding for apprenticeships

This probably isn’t going to affect individual tradies, but if it helps apprentices it has to be good for the industry.

As we know the old 457 Visa system has been replaced by a new one, and now employers who take on foreign workers via this new scheme will have to contribute to the new Skilling Australians Fund.

The fund is intended to support Australian apprentices and trainees, and the Government believes it could assist up to 300,000 of them.

Result: WIN.  Even though it won’t affect individual tradies.

The black economy

Whether it’s true or not, there’s always been a perception that tradies deal in plenty of cash payments to avoid tax.

The latest budget addressed issues around what they call the “black economy”.  They’ve even put together a taskforce to help work out ways to reduce cash payments to contractors.

Tradies didn’t get a specific mention this year, but couriers and cleaners did.

Result: WIN or LOSS depending on your point of view…  If you never deal in cash, it could be seen as a win as it “levels the playing field”.  If you do prefer cash, it’s a loss if things are going to get more difficult for you…

First home buyers

Houses

If you’re a young tradie saving up for your first home deposit, you’ll benefit from tax concessions on your savings.

Savers will be able to salary sacrifice up to $15,000 a year into their super fund, which they can then pull out to use for a house deposit.

The Treasurer says you could be up to 30% better off using this method, which is a pretty serious benefit.

One big issue for tradies is that sole traders are unable to salary sacrifice.  Given that so many tradies operate as a sole trader, this is no good.

You can salary sacrifice as an employee of your own company though, so you may find you’re better off switching from a sole trader to company structure in order to access the salary sacrifice benefits.

Result: WIN if you’re an employee (including of your own company) and saving for for your first home.

Smokers

Budget 2017

For those tradies out their rolling their own ciggies, get ready for a price increase.

From 2017 to 2020 the tax treatment of roll-your-own tobacco and cigars will move into line with pre-made cigarettes.

Result: LOSS if you love your rollies.

Overall

There’s nothing amazing in this budget that affects tradies for better or worse.

There are a few little positives, a few little negatives and not much else.  Extending the instant asset write-off is certainly the highlight.

Infrastructure received plenty of attention in the budget, and more infrastructure means more building work, which is always good for anyone in the industry.

Here at Trade Risk we’re experts in insurance rather than accounting, so we strongly recommend speaking with your accountant for more specific information about how the budget affects you.

You should not make any financial decisions based on this article without first consulting your tax accountant.

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