Small businesses received some key changes from the 2015/16 Federal Budget to deliver lower taxes and hopefully cultivate growth. The following are some of those key changes to small businesses with an aggregated turnover of less than $2 million:
TAX CUTS FOR SMALL BUSINESS
The following tax cuts will be available to small businesses in the 2015/16 year:
- 1.5% Tax Rate Cut for Small Companies: Company tax rates will be reduced from 30% to 28.5% for small companies. Companies over $2 million will be subject to the current 30% rate. The current maximum franking credit rate will remain unchanged at 30% for all companies.
- 5% Discount on Tax Payable by Small Unincorporated Entities: Individual taxpayers with business income from a small unincorporated business entity (such as trusts or partnerships) that has an aggregated annual turnover of less that $2 million will be eligible for the small business tax discount. This discount will be capped at $1,000 per individual for each income year, and delivered as a tax offset.
ACCELERATED DEPRECIATION FOR SMALL BUSINESS
Small businesses that purchase and install assets from 12 May 2015 that are under $20,000 will be able to claim an immediate deduction for that asset. This accelerated depreciation will be available up until 30 June 2017.
In addition the current ‘lock out’ laws have also been suspended for the simplified depreciation rules until 30 June 2017.
Where assets purchased are $20,000 or more they will be depreciated at 15% the first year and then 30% each income year after that.
IMMEDIATE DEDUCTION FOR PROFESSIONAL EXPENSES
Businesses will now be allowed to claim an immediate deduction for a range of professional expenses to start a new business.
CGT ROLL-OVER RELIEF FOR RESTRUCTURING
Small businesses will now be able to change legal structure and not attract CGT on the transition. This will begin in the 2016/17 year.
FBT CHANGED FOR WORK-RELATED DEVICES
A FBT exemption will be allowed from 1 April 2016 for small businesses with an aggregated annual turnover of less than $2 million that provide employees with more than one qualifying work-related portable electronic device.