Morrison Answers Business Owners Prayers
NLP leader and devout Christian, Scott Morrison, had his prayers answered last night in an election victory of biblical proportions.
The shock win has been described as a ‘miracle’ by Australian political commentators, which saw the NLP defy the polls with major swings in Queensland and Tasmania ending opposition leader, Bill Shortens, political career. “I believe in miracles,” Morrison said in his victory speech.
While the win may not appear to be in the same league as ‘David and Goliath’ or ‘Noah’s flood’, but for the majority of Australians and business owners, it just may be.
We asked financial expert Thomas Mousa, director and partner of Sydney based TLK Partners, to comment on the effects of the NLP’s win for businesses.
The NLP’s primary election policy was tax cuts. Tax cuts will provide tax breaks for more than 10 million Australians and simplify the system by removing the 37 per cent tax bracket entirely. “The implication for business is simple, lower PAYG tax implications as the tax brackets are adjusted,” Mousa said.
The measures will cost the Treasury $158 billion over 10 years. “From July 2022, the government will raise the 19 per cent tax bracket from $37,000 to $45,000 and from July 2024, the plan is it will reduce the 32.5 per cent rate to 30 per cent and do away with the 37 per cent rate,” Mousa says.
“Ultimately, this will make a flat 30 per cent tax rate for anyone earning between $45,000 and $200,000, which is a much-simplified tax system,” Mousa stated.
The NLP’s simulations demonstrate a worker earning $200,000 a year will get a tax cut worth $11,640 compared with $1205 for someone earning $50,000 a year. Either way, the outcome for businesses is a win for cash flow.
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Another key election promise of the returning government for business is an Instant asset write-off.
Businesses with revenue greater than $50 million can write-off assets against their taxable income. Previously, businesses with revenue greater than $10 million were excluded from the scheme. The NLP has also increased the threshold from $20,000 to $25,000.
Medium businesses stand to benefit more from the new expanded instant asset write-off than their smaller counterparts who are required to elect to use simplified depreciation to access the write-off.
Mousa comments, “This is great for medium-sized business, however, a small business entity that does not elect to use simplified depreciation may be excluded from accessing the instant asset write-off both under the small business and medium-sized business definitions.”
“A more beneficial change for small business owners would perhaps have been to extend the instant asset write-off to all small business entities irrespective of whether they elected to use simplified depreciation for small business or not,” Mousa says.
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“Business owners trust TLK Partners to steer them in the right direction and to assist them in maximising their business assets,” Mousa concludes.
Political pundits are praying that Scott Morrison, having now won the vote of Australians in his own right, will have a period of political stability as Morrison is the seventh Australian Prime Minister in 11 years. And the people said, “Amen.”
TLK Partners Wealth Management Companies Kingsgrove, Beverly Hills | Tax Accountant & Agent | Property Advisers are financial management, retirement planning and wealth advisers serving enterprises and private individuals who hope to take care of their future through sound financial management. Visit their website or contact them at (02) 8090 4324 for an appointment to discuss your financial management and investment needs.
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