The 2015 Federal Budget has proposed a number of tax incentives for small businesses. A small business is an entity that is operating a business with an annual turnover of less than $2 million (when aggregated with the turnover of associated entities).
Key changes announced include:
- From 1 July 2015, the corporate income tax rate for small business companies will reduce from 30% to 28.5%. Shareholders of these companies will continue to receive a 30% franking offset when they receive franked dividends. Small businesses that operate as sole traders or through trusts or partnerships will receive a 5% tax offset, capped at $1,000 per individual per year.
- From 1 July 2015, small businesses will be able to immediately deduct a range of professional expenses associated with starting a new business.
- Small businesses will be able to claim an immediate deduction for eligible assets costing less than $20,000. This new threshold will apply to most assets acquired and installed ready for use between 12 May 2015 and 30 June 2017. From 1 July 2017, the thresholds will revert back to existing (much lower) thresholds and therefore this concession is available for a limited window of time to stimulate small business spending. Most cars, machinery and equipment will be eligible however a small number of assets will not be eligible for this immediate write-off, such as horticultural plants, capital works and in-house software.
These announcement have not yet been enacted as law, therefore care should be taken in making business decisions based on these proposed changes. We recommend you discuss with us any material decision or investment you wish to make prior to the end of the financial year.