Federal Budget 2018 – Review | KPMG | AU

Federal Budget 2018 – Review

Federal Budget 2018 – Review

On Tuesday 8 May 2018, the Commonwealth Treasurer, The Honourable Scott Morrison MP delivered Australia's 2018–2019 Federal Budget. This report provides insights and analysis into the Budget's major implications for Australian business, industries and sectors.

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Federal Budget 2018 – Review

In a pre-election year the government has delivered a budget that aims to build a fairer society, while announcing it expects the Budget to return to surplus by 2019-20. The central drivers include the recovery of taxes from the black economy as a significant contributor to revenue, while introducing $13.4 billion in personal income tax reductions.

The passage of the government’s bill to reduce company tax rates remains uncertain, however the impact of changes to research and development incentives, and keeping a watchful eye on any progress of the company tax cut bill will be important for business.

Key measures announced

  • Introduce personal income tax reductions in a three phased approach and withdraw last year’s proposal to increase the Medicare levy.
  • New infrastructure spending initiatives such as the Melbourne airport rail link, Queensland major highway and rail improvements and several projects in Western Australia.
  • Response to the final report from the Black Economy Taskforce, including a ban on cash transactions above $10,000 and denying a tax deduction for wages where the employer does not withhold PAYG income tax.
  • New thin capitalisation rules that will limit companies’ ability to claim deductions for interest on debt.
  • The introduction of an intensity threshold for the research and development (R&D) tax incentive.

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