As you’ve no doubt heard, the 2016 Budget delivered some pretty solid results for those in the building and construction industry. Here at Tradify HQ and we’ve put together a quick rundown of what’s on the cards for Aussie Builders and how you can take advantage.
As far as budget announcements go some exciting developments went down, with Treasurer Scott Morrison serving up a budget overview that promises lower tax rates and nationwide relief to more than three million businesses.
In fact, under the Liberal Party’s proposed budget, Turnbull’s tradies, come out well and truly on top.
Lower tax rate, higher threshold
Above all others the building and construction industry got a massive boost from the Budget for two reasons.
The first reason is the announcement that the company tax rate for small business will progressively drop down to 25% while the definition of small business will expand (from $2m revenue per annum to $10m in revenue per annum).
The second reason is due to their continued commitment to roll out the $50 billion infrastructure package.
Even Master Builders Australia has given the budget its seal of approval, maintaining that a rise in infrastructure spending and a decreased tax rate will work wonders for SMEs.
“More than 300,000 tradies and builders in Australia’s $200 billion building industry are winners from the budget,” commented CEO Wilhelm Harnisch. “Measures to cut company tax rates for SMEs and the expanded tax write-off will be an immediate shot in the arm for builders, particular in the equipment intensive building industry.”
To make sure you get the most out of these savings make sure you have a chat with your accountant asap. The sooner you get a plan in place the better. Depending on your situation these funds could be used to pay down debt, invest in new infrastructure, take on new staff, or additional marketing.
Your accountant is the best person to work through these options with so pick up the blower and get a chat booked in.
BIG tax claims for Builders
Let’s hear it for Turnbull. The Herald Sun may have accused him of blowing $2 billion on becoming Prime Minister, but at least he’s making a valiant attempt to ease the burden on Aussie SMEs. Under the new budget small businesses will be able to make tax claims on purchases topping a huge $20,000.
With the economy transitioning away from its near exclusive reliance on mining, SMEs have been hailed as "the hope of the side" for the nation. “They work hard, earn more; the budget has to back them, that's the bottom line," said Morrison.
Sure, claims must be relevant and necessary but there’s a huge amount of scope for machinery, tools, electronics, vehicles and more. What’s that we hear? The sound of upgrades on the horizon? Heck yes.
Here’s an idea, why not take advantage of this to upgrade your desktop computers for your office workers and tablets your fields workers are using out in the field. With your team empowered with the latest hardware it just makes sense to get them using a job management and tracking solution (such as Tradify!!)
As we’ve said already there is only one person best placed to work through these options with and that's you accountant. Buying some cool new tools might sound like fun but don't forget you can't claim back anything till you’ve actually bought it and that cash might be better used for other things.
Investing in the future
Great news for up and coming tradies, with Morrison announcing that the Turnbull administration will invest $840 million in a proposed youth employment strategy.
Not only will a bunch of funds be tipped into training programs but Builders themselves will receive a $1000 bonus for taking on new interns and in the final stage of the program Builders will be eligible for a "Youth Bonus wage subsidy" of between $6,500 and $10,000, depending on the young person's job readiness.
If you’ve been thinking about growing your business this should mean there is more incentive to take on enthusiastic, highly motivated apprentices that will form the next generation of Aussie workers. Ideally bringing on more capacity would allow Builders to take on more clients and more work.
Our recommendation is once you’ve combined Tradify with the fancy new tablets and desktop computers then start thinking about your future….. could you use an intern or apprentice and could you properly support them if they did come on board???
Some additional, but slightly less significant changes.
Personal Tax Cuts
If you don't actually own and run a business you could still be in for a nice wee boost from the budget given the increase in the $0.32c tax bracket from $80k to $87k. This means that the next highest tax rate (37%) won’t kick in for another $7k. If I'm earning $87k, i just saved $315!!
No Negative Gearing Changes
Assuming cuts to negative gearing would have had a negative impact on construction work (particularly on existing homes) then no changes at this stage is possibly a good thing for Builders.
All in all there's a fair bit in the budget for most builders out there. If you haven't already jack up a chat with your account or business coach and start thinking about ways you can maximise these incentives.