Hockey puts GST on downloads

The price of streaming a movie, e-books, games and other digital products bought from overseas will go up by at least 10 per cent under the new so-called Netflix tax in what Treasurer Joe Hockey says is a levelling of an unfair playing field.

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The new rules will apply the 10 per cent GST to digital products and services supplied from foreign businesses.

It is estimated to raise $350 million over the next four years for the states and territories.

“It is unfair that overseas-based businesses selling services into Australia may not charge GST when local businesses have to charge GST,” Mr Hockey said.

“A local business that employs Australians, pays rent in Australia, pays tax in Australia, and helps build our economy is disadvantaged by the current system.”

Other online companies Airbnb, Uber and Netflix could also be caught in the new tax net.

Similar rules have been or will be introduced in Japan, Norway, South Africa, South Korea, Switzerland and members of the European Union, according to budget papers.

However other low value goods bought online from overseas have escaped the GST.

The GST was designed to apply to all products and services, except for specifically exempted products food, health and education, and the new measures closed that loophole, the papers said.

NETFLIX TAX TO LEVEL PLAYING FIELD

* Foreign firms selling digital products, services in Australia to pay GST

* Applies to downloaded movies, games, e-books and maybe Airbnb, Uber, Netflix

* Forecast to raise $350m over next four years

* Designed to level playing field for Australian businesses.

Budget boost for infrastructure

Western Australia, Queensland and the Northern Territory are set to benefit from a $5 billion fund for new ports, rail and power projects across northern Australia.

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Low-interest loans, which will go to public-private partnerships, are part of a record spend on infrastructure outlined in Tuesday’s federal budget.

However, the coalition has refused to bow to the Victorian Labor government’s mandate and has not given up on spending $3 billion on the controversial East West Link.

Transport Minister Warren Truss said the Melbourne road was “delayed but not dead”, but has banked $1.5 billion in the budget papers in unspent funding.

The $5 billion Northern Australia Infrastructure Facility will provide an initial $327 million in 2016/17.

The budget continues spending on major road upgrades including the $5.6 billion Pacific Highway duplication, $2.9 billion Western Sydney infrastructure plan and $6.7 billion Bruce Highway upgrade, as well as the $925 million Perth Freight Link.

On a smaller scale, communities in every electorate are set to benefit from a $45 million Stronger Communities fund for projects of around $150,000 each.

WHAT’S IN THE BUDGET FOR INFRASTRUCTURE

* $5 billion for ports, rail, pipes and power stations in a new Northern Australia fund

* $3 billion still set aside for Melbourne’s East-West Link, despite Labor government opposing it

* $5.6 billion Pacific Highway duplication (NSW)

* $2.9 billion Western Sydney infrastructure plan (NSW)

* $6.7 billion Bruce Highway upgrade (Qld)

* $500 million Ballarat to Stawell Western Highway duplication (Vic)

* $925 million Perth Freight Link (WA)

* $500 million Darlington Interchange (SA)

* $400 million Midland Highway (Tas)

* New Stronger Communities program $22.5 million in first year for small social and economic projects in every electorate.

Tax cuts, write-offs for small business

Small businesses will be able to immediately write off assets worth up to $20,000 as part of the Abbott government’s efforts to encourage them to spend more and grow their operations.

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The move is part of a $5.5 billion package aimed at boosted the 96 per cent of Australian businesses with an annual turnover of less than $2 million a year.

Under the change, small businesses can claim a tax deduction for the full value of assets worth up to $20,000 in a single year, rather than over five years as had been the case.

That could include things like cars, kitchens, machinery, computers and tools, the government says.

The company tax rate for incorporated small businesses will also fall from 30 per cent to 28.5 per cent, with unincorporated businesses receiving a five per cent tax discount of up to $1,000.

Treasurer Joe Hockey said the changes will allow small businesses, which he described as the engine room of the economy, to spend more on expansion.

“This will be of enormous benefit to their bottom line and help businesses with their cash flow,” Mr Hockey said.

“It means innovation. It means jobs. It means more money to invest and grow your business.”

The government is also changing Fringe Benefits Tax rules to allow for tax exemptions on multiple portable electronic devices such as smartphones and tablets.

Under existing rules, tax exemptions were only provided for one device.

And the government has announced it will provide capital tax relief to small businesses who change their legal structure, without changing ownership.

Diplomatic footprint to be expanded

The budget provides $98.

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3 million for five new overseas Australian missions in Doha, Qatar;Buka, Bougainville PNG; Makassar, Indonesia; Ulaanbaatar Mongolia; and Phuket, Thailand.

The Australian embassy in Washington will also get some new digs.

There’s also $50 million for a gender equality and women’s empowerment fund.

WHAT’S IN THE BUDGET FOR FOREIGN AFFAIRS?

* Australian official aid budget cut to $4 billion in 2015-16, less than the $5 billion cut the previous year.

* $98.3 million over four years for five new overseas Australian missions;

– Doha, Qatar,

– Buka, Bougainville PNG,

– Makassar, Indonesia

– Ulaanbaatar Mongolia

– Phuket, Thailand

* Australian embassy in Washington to get a new home but cost unknown.

* $50 million towards a gender equality and women’s empowerment fund.

* $138.4 million over two years to continue diplomatic presence in Afghanistan and security.

* $106 million over two years continue diplomatic presence in Baghdad, Iraq and security.

OFFSHORE BUDGET MEASURES WORTH $8B

– $6 billion in new trade agreements with China, Korea, and Japan

– $1 billion cut in foreign aid payments

– Multinational Anti-Avoidance Law to recover unpaid taxes by large international companies that shift profits overseas

– End to the tax free threshold of $20,000 for foreigners on working holidays, which will save $5.4 million

– New fee regime for foreign investment in Australia to deliver $735 million in revenue

– Foreign businesses supplying digital products subject to GST to raise $350 million

– Plans to reclaim $140 million over ten years in HECS debt owed by expatriates