Note: This is our summary of the 2018 budget. To view the latest guide please follow the link below:
Budget 2019: What’s in it for Tradies?
It’s that exciting time of the year again, Budget night!
Last night the treasurer, Scott Morrison, handed down his budget. We’ve broken it down to see how tradies will be affected.
Instant asset tax write-off
Instant asset tax write-offKicking off with some good news, the $20,000 instant asset tax write-off is staying for another year.
Introduced in 2016, this scheme allows businesses with turnover of less than $10 million to instantly write-off assets purchased for less than $20,000.
Whilst it doesn’t necessarily mean you get back any more money, it does mean you can get it back years sooner.
Result: WIN.
Tax cuts
No one likes paying tax, and this budget comes with some nice tax cuts that will help tradies.
Our annual How Much Do Tradies Earn report for last year showed that the average taxable income for a self-employed tradie was just over $82,000.
The tax cuts mean that tradies (or anyone else for that matter) earning up to $90,000 a year could receive up to $530 extra back at tax time. Not bad.
There were also some longer term tax plans revealed, which will get rid of some extra tax brackets. This should assist those tradies who find themselves creeping into those higher brackets.
Result: WIN.
More apprenticeship funding
An extra $250 million will go to the Skilling Australians Fund to support growth in apprenticeships and traineeships.
Result: WIN.
Crackdown on phoenix activity
Every subbie will have a story about a builder or contractor who has gone bust owing them money, only to rise from the ashes under another name, still avoiding their debts.
The budget included some new rules to help crack down on company directors who try this scam. It’s hard to know how effective it will be, but it should be good news for subcontractors.
Result: WIN.
Roads
We won’t go into great detail on this one, but there are billions set aside for road projects across Australia.
Tradies spend a huge amount of time on the road with no option for public transport, so better roads and reduced congestion have to be a win.
Result: WIN.
Cash payment crackdown
Every year we hear about the cash economy and how much it costs the taxpayer. Often such stories are accompanied by photos of tradies, insinuating that the building industry is a major contributor.
This year’s budget brings in a new rule which limits cash payments to $10,000 from July 1 2019. Any payment over this amount must be made by electronic transfer or cheque.
We’re not sure how effective this one will be. For people who are happy to break the law and not declare certain cash payments, why would they be worried about breaking a new law?
Result: WIN or LOSS depending on your point of view… If you never deal in undeclared 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…
Craft beer
Craft beer drinking tradies could be in for some savings, with the tax being reduced on such brews.
For some strange reason craft beers were being hit with higher taxes than the big brewers (something to do with keg sizes) and this will bring them into line.
Result: WIN.
Overall
There’s nothing amazing in this budget that going to change tradies lives, but a tax cut is always nice.
Extending the instant asset tax write-off is also a great thing. Hopefully this ends up being a permanent change for small business.
Here at Trade Risk we’re experts in insurance rather than accounting, so we strongly recommend speaking with a specialist tradie 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.
