Valuable concessions for small business
Australia’s 2.1 million small businesses received a boost from Tuesday’s Federal Budget with tax cuts and immediate deductions available on asset purchases.
The measures introduced for small businesses include:
- A 1.5 per cent cut in company tax from 30 per cent to 28.5 per cent for incorporated small businesses
- A 5 per cent tax discount for unincorporated businesses up to $1,000 per year
- An immediate tax deduction for any individual asset costing less than $20,000
- Changes to the tax treatment of employee share schemes
- Ability to change business structures tax-free
- Fringe benefits tax exemption for portable electronic devices.
The 1.5 per cent tax cut applies to incorporated small business. Unincorporated businesses (such as sole traders, trusts or partnerships) with a turnover of less than $2 million will receive a 5 per cent discount on income from 1 July 2015, capped at $1,000 in any tax year.
All small businesses will get an immediate tax deduction for any individual asset they buy costing less than $20,000. This went into effect at 7.30pm on 12 May 2015, as it was announced, and is available until 30 June, 2017. This is a stark contrast to the previous threshold of $1,000. Small businesses can now apply this ‘$20,000 rule’ to as many individual assets as their business requires.
Further changes to the tax treatment of employee share schemes have been introduced from 1 July 2015, encouraging investment in small business. The three-year holding period on employee share allocations can now be waived by the Commissioner of Taxation if there are circumstances outside the employee’s control that require them to sell their shares.
Small businesses will now be able to change the structure of their business, such as moving from being a sole trader to a trust, without incurring a capital gains tax (CGT) liability.
All work-related portable electronic devices will be fringe benefits tax (FBT) free. In the past if you had two or more devices such as a laptop and a tablet then you would have had to pay FBT on one of the items.
It certainly seems these changes will go some way towards helping small business inthe current tough economic conditions.
Important information: this article is intended to provide general information only and does not take into account your individual objectives, financial situation or needs. Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information.