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What does this mean for small business?

The Treasurer Mr Hockey announced significant incentives and concessions in his 2015/16 budget for “small businesses” to help facilitate growth and increase employment opportunities. Small businesses are considered those with less than $2million aggregated annual turnover. Such businesses will be able to access the following:

  • A $20,000 immediate write-off for all assets purchased until 30 June 2017
  • A tax rate cut of up to 5% from 1 July 2015
  • Capital Gains Tax roll-over relief for restructuring, available for all entity types from 1 July 2016Open Sign
  • Upfront immediate deductions for professional costs incurred in setting up a new business from 1 July 2015.

Pending passing of the legislation, the $20,000 up-front write-off for assets will be available immediately and therefore will play a role in 30 June 2015 tax planning for small businesses. To obtain maximum advantage from the proposed concessions, additional funding may be required.

The remaining changes are to apply from 1 July 2015 (or 1 July 2016 for CGT roll-over relief) and are aimed at improving cash flows for small businesses to enable further expansion opportunities. This is evidenced in the small business tax rate cut, which aims to reduce the tax rate from 30% to 28.5% for companies meeting the small business definition. A 5% tax rate cut for business income distributed to individuals from unincorporated small businesses  including sole traders and trusts, has also been announced.  The value of this reduction is capped at $1,000 per individual.

Other noteworthy announcements

No superannuation or dividend imputation changes – yet!

No changes were announced in the budget to superannuation or dividend franking credits.  We note that the Government’s Tax White Paper and the Murray Financial System Inquiry are yet to be finalised and we expect further consultation to occur on these topics.

HELP/HECS debts of foreign residents

Australian graduates living overseas will no longer be ineligible to avoid HELP/HECS debt repayments, with income earned overseas being counted towards the minimum repayment thresholds. This will apply to all existing and new debts with repayments required from 1 July 2017.

If you would like to find out more about how the proposed changes may impact your business or yourself, or would like to discuss these matters further, please contact your Pilot advisor on (07) 3023 1300.