fbpx

Saving Money

Last night the Treasurer handed down his 2016 Budget.

The good news is that many tradies will be better off under this budget.

We’ve broken the good and bad down for you.

Company Tax Cut

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

In the 2015 budget it was announced that the company tax rate was reducing from 30% to 28.5% from 1 July 2015 for businesses with turnover less than $2 million.

In last night’s budget the size of the cut and the turnover limit was increased, bringing the rate down to 27.5% from 1 July 2016 for businesses turning over less than $10 million.

This doesn’t represent a huge benefit for a typical trade business, but it’s certainly better to keep a few extra dollars in your own pocket rather than gifting it to the ATO.

The cuts will continue each year for the next decade until the rate for all companies is 25%.

Personal Tax Cut

Tradies with a taxable income of more than $80,000 will benefit from a tax cut in this year’s Budget.

Our annual ‘How much do tradies earn’ report shows that around a third of construction tradies are earning close to $80k or more, so many of these workers will benefit.

The benefit comes by moving the tax bracket from $80k to $87k, meaning that the next highest tax rate (37%) won’t kick in for another $7k.

What does this mean in dollar terms?  Well if you earn more than $87k your income tax will reduce by $315 for the year.

Again, not exactly a fortune and unlikely to have any impact on your life, but still better than paying it to the ATO.

Smokers

The bad news is that if you’re a smoker, you’re in for another tax hike.

The tobacco excise will increase by 12.5% each year for the next four years, meaning the cost of a pack of smokes will increase considerably over that time.

No Negative Gearing Changes

There has been plenty of talk about changes to negative gearing in the lead up to this budget.

Building Project

Plenty of people are pushing for change as they believe it will lead to better housing affordability.

But there was also an argument that changes could have a negative impact on the housing industry.

At Trade Risk we don’t pretend for a second to be economists, so we’re not going to say whether or not construction would have been affected by such changes.

However assuming that cuts to negative gearing would have had a negative impact on construction work (particularly on existing homes) then no changes is possibly a good thing for tradies working in residential building.

Roads and Infrastructure

There was plenty of money put aside for roads and infrastructure over the coming years.

Whilst this doesn’t directly affect the dollars in your pocket, it can be seen as a positive.

More infrastructure projects means more work around for tradies, and given how much time we spend getting from job to job, better roads are also a boost.

Overall

Budget 2016 certainly won’t be changing any tradies lives one way or the other, but no one’s going to knock back a tax cut.

If you run your business via a company setup and earn more than $80k in personal taxable income, then you have to consider this budget a win.

Here at Trade Risk we specialise in insurance, not taxation and accounting.  If you require further information we recommend speaking with your accountant.

It is important not to make any financial decisions based on this article without first seeking advice from an appropriate professional.

Tradies Love Trade Risk

In 2017 Trade Risk was awarded a Gold Trusted Service Award for the amazing service we offer to thousands of tradies from around Australia.

  • "user friendly"
    Matthew Chris Pinney | Tradesman Insurance |
  • "Efficient, prompt and no fuss approach to handling our insurance needs."
    | Tradesman Insurance |
  • "As a small business owner in the complex Telecommunications Industry TRADE RISK have assisted the complexities for our business. I shall recommend TRADE RISK to all my business partners. LOGREEN"
    Logreen Pty Ltd | Tradesman Insurance | MELBOURNE VICTORIA
  • "Excellent service."
    Ozi Sheds Pty Ltd | Tradesman Insurance |
  • "Easy to obtain quote. clear information and fast to set up. Can rest assured that l have cover, hopefully never need to use it."
    | Tradesman Insurance |
  • "Efficient and well priced. Thank you."
    | Tradesman Insurance |
  • "My contact Cheryl was very helpful and explained everything to me in easy terms. She was friendly and made me feel at ease and answered my many questions immediately. Thank you"
    Heeney Homes Pty Ltd T/As Heeney Homes Pty Ltd | Tradesman Insurance |
  • "Good value with very simple and easy steps to follow, got prompt response also. Very happy overall."
    | Tradesman Insurance |
  • "Easy to deal with."
    | Tradesman Insurance |
  • "Prompt, friendly and informative."
    | Tradesman Insurance |
  • "Brilliant service."
    | Tradesman Insurance |
  • "great customer service marred by requests to do stupid polls like this one"
    Christopher Francis Gould | Tradesman Insurance |
  • "Good service and price. Will try all products."
    | Tradesman Insurance |
  • ".........."
    | Tradesman Insurance |
  • "Reminder of policy expiring, prompt service and good price"
    | Tradesman Insurance |
  • "I think that trade risk's customer service was excellent. They are really friendly and polite. Followed up really well."
    Daniel Phillips | Tradesman Insurance |
  • "Fast and easy"
    Gantulga Davaasuren | Tradesman Insurance |
  • "I've dealt with this company for a few years now - from the very start they've always efficient and fast... they sort out the paper work that other companies leave the customer to wade through. In a nutshell they save me buckets of time... and time is money. They also save me the aggravation of the paperwork and the back-and-forth that is so common with many insurance companies.."
    Saxon James Pty Ltd | Tradesman Insurance |
Share via