The treasurer Scott Morrison released the federal budget last night. It was largely bereft of any major surprises with hints in the days leading up to the budget of it being in favour of small businesses and middle income earners.
In this blog post we have highlighted some of the budget items impacting on agriculture and agribusiness.
No repeal of the backpacker tax. The tax free threshold will be removed for backpackers on the 1st of July, and a tax rate of 32.5% will apply.
It is expected that the backpacker tax will become an election issue.
Water infrastructure: The announcement of a $2bn concessional loan facility, in order to assist with the construction of pipelines and dams.
There will also be $9.5m available to the states for water project feasibility studies.
Landcare: The budget for Landcare has been increased by $22.6m, however the increase pales in comparison to the reductions in the prior two budgets.
Tax deductability: The tax write off for purchases to $20,000 for businesses with turnovers up to $10m has been extended for another year. This popular policy will likely keep machinery dealers around the country happy.
Managing farm risk: Farms with an annual revenue <$2m will be able to apply for rebates of $2500 to cover the costs of farm insurance advice/assessments. This will alleviate some of the costs of the assesments required for many multiperil crop insurance policies.
Rural Financial Counselling: There will be $7.1m provided over the next four years in order to provide assistance to those in areas of drought and need.
Fodder levy: A 50c/mt levy will be applied to all export straw and hay. The levy fund will be used for R&D.
Business rates: The company tax rate will be reduced to 27.5%, with the small company threshold increasing to $10m. This is part of an ongoing plan to reduce business rates over the next ten years to the point where all businesses are paying 25%.
The reduction in business rates is encouraging and will make Australia a more competitive place to conduct business compared to other competing countries.
Income Tax: In order to avoid bracket creep the threshold for paying the second top bracket (37%) has been increased by $7000 to $87000.