With #ScoMo delivering his second budget a fortnight ago, here’s a quick rundown of a selection of the proposed measures and potential outcomes for business. Bank tax, increased medicare to fund NDIS, aspiring first home buyer and downsizer assistance via super as well as the scaple being taken to areas such as CGT and health were all feaures. Our friend the $20,000 instant asset writeoff for small business (turnover up to $10 million) has been extended for another year and the government has reaffirmed it’s commitment to cut company tax rates to 25% over 10 years. We can look forward to the usual ensuing hoo haa over the coming weeks and months to see which measures pass, are modified or shelved.
Here is a quick look at some of the budget measures affecting small business and the tech industry.
GST on Cryptocurrencies
The budget has flagged measures to remove GST from the trading of cryptocurrencies such as bitcoin by treating them as currency for GST purposes. Previously the ATO it was stated that cryptocurrencies were to be treated as a commodity rather than a currency. As such, GST registered businesses accepting bitcoin for payments would need to pay GST on the sale of crypto currency themselves as well as the sale of their goods or services to customers. Although this measure appears to have no real impact on investors and individuals using cryptocurrencies for everyday transactions (GST hasn’t been in effect applied to buys and sells even from exchanges for these users despite the ATO ruling) the measures should make it easier for Australian businesses to receive bitcoins as payment for goods/services without the risk of double taxation. Follow link here for an example of the issues caused by the ATO ruling in 2014 for Brisbane Based Startup Living Room of Satoshi.
The use of crypto currencies is looking good in Australia from 1 July 2017 given these changes for business and the existance of the CGT exemption for individuals using bitcoin predominantly for personal use where the value of holding is less that $10,000.
Xtend Accounting will definitely look at accepting payments in cryptocurrencies from 1 July in light of the legislation changes.
Crowd Sourced Equity Funding
Referring to the previous blog on this page, the crowd source equity funding measures recently implemented for public companies were a step forward in freeing up sources of capital for Australian startups. These changes are due to take effect from Grand final day public holiday (Victoria) 29 September 2017. Being limited to public companies however, the change was critised as being unusable to the vast majority of startups operating as private Pty Ltd companies. The budget has measures to address this and open up CSEF to private companies by allowing unlimited number of equity shareholders. Currently private companies are only able to have a maximum of 50 .
The change will allow private companies to access funding from non-sophisticated investors and allow mum and dad investors to more easily diversify by getting exposure to Australia’s startups. Additional reporting requirements and adherance to accounting standards will be placed on companies wishing to use CSEF. Draft legislation is open for submissions until 6 June 2017.
The government has made it easier for new entrants into the banking sector to receive licences to encourage competition and innovation. Legislation will allow for institutions with less than $50 million to call themselves ‘banks’. Australian businesses such as Tyro, who were the first tech startup in Australia to be awarded a bank licence, have been doing some great work in this area and new measures should encourage new entrants and new innovation in the sector.
The budget has had a mixed response as far as innovation is concerned but gives us a few wins in a dynamic and constantly evolving landscape.