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Budget 2015 – Small Business

Budget 2015 – Small Business

Business Owner

Federal Budget 2015 – Small Business

Small businesses with a turnover of less than $2 million have been singled out as one of the major growth engines of the economy.

In order to encourage the sector to invest, innovate and create new jobs, small business will receive a 1.5 percentage point tax cut to 28.5 per cent, the lowest in almost 50 years. Unincorporated businesses have not been forgotten – they will receive a five per cent tax discount worth up to $1000 a year.

The small business instant asset write-off will also be increased from the current $1000 to $20,000, starting immediately. This measure will help small businesses manage their cash flow and reduce paperwork at tax time.

The government is also abolishing fringe benefits tax for small businesses on portable devices such as mobiles, tablets and laptops. And in a nod to the growing importance of the entrepreneurial sector, employees in start-ups will receive tax breaks on shares they receive as part of their remuneration.

 Company tax rate for small businesses

Proposed date of effect: 1 July 2015

The rate of company tax for eligible small businesses[1] will be reduced by 1.5% to 28.5%. These companies will continue to frank their dividends at up to 30%.

Tax discount for unincorporated small businesses

Proposed date of effect: 1 July 2015

Small businesses that are unincorporated, such as sole traders and partners in partnerships, will be able to reduce their tax liability related to small business profits by 5%, up to a maximum amount of $1,000.

CGT roll-over relief

Proposed date of effect: 1 July 2016

Small businesses will no longer be subject to Capital Gains Tax (CGT) if it benefits from changing its business structure. For example a company could be restructured as a trust without the transfer of the company’s assets to the trust triggering CGT.

Accelerated depreciation

Proposed date of effect: 12 May 2015

Small businesses will be able to fully deduct the cost of assets worth up to $20,000 in the year they are acquired. This concession will be available on purchases from 7.30pm 12 May 2015 until 30 June 2017. The concession can apply to more than one asset purchased in the same year.

Drought relief

Date of effect: 1 July 2016

Under a $300 million drought relief package, primary producers will be able to fully deduct capital expenditure on fencing and water facilities, in the year the costs are incurred. They will also be able to deduct capital expenses related to fodder storage over three years.

[1] A small business is defined as a business with an aggregated turnover of less than $2 million.

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