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Federal Budget 2017: Impact on small business

Federal Budget 2017: Impact on small business

Tax concessions and a boost to productivity were key highlights for small businesses in this year’s Federal Budget.

The Federal Budget announcement has outlined a number of benefits for Australian small businesses, including an extension to the asset write-off program for an additional year, a commitment to lowering taxes and moves to incentivise states and territories to reduce red tape.

Asset write-off extended

The government has extended the $20,000 immediate tax deductibility threshold for a further 12 months to 30 June 2018. The turnover threshold has also been increased to $10m in annual turnover.

In its Budget overview statement, the government outlined: “The $20,000 immediate deductibility threshold has been well received by small business and claims of depreciation deductions have increased. Small businesses across Australia are investing in assets that will help them grow and prosper.”

Commitment to lowering corporate tax

The government has reaffirmed its commitment to cutting the corporate tax rate for all businesses to 25% as part of the Ten Year Enterprise Tax Plan. This is further to the recently legislated tax cuts for small and medium businesses.

Reducing red tape

Under the new National Partnership on Regulatory Reform, the government will provide $300m over two years to incentivise states, territories and local governments to lessen the regulatory burden on small businesses.

By reducing red tape and regulation, the government outlined that it is seeking to “help small businesses by levelling the playing field in the market, decreasing business costs and giving businesses more time to run and grow their business”.

Work visas and skills shortages

The government has announced it will abolish the Temporary Work visa for foreign workers and create a new temporary visa restricted to critical skills shortages.

Employers who nominate workers for the new visas (and certain permanent skilled visas) will be required to pay a levy that will go into the newly created Skilling Australians Fund.

According to the government, this new fund is expected to support Australian skills development and the take‑up of apprenticeships and traineeships.

In his Federal Budget 2017 speech, Treasurer Scott Morrison said: “Until now, employers have had to contribute 1 or 2% of their payroll to training if they employ foreign workers.

“We are replacing these requirements with an annual foreign worker levy of $1200 or $1800 per worker per year on temporary work visas and a $3000 or $5000 one-off levy for those on a permanent skilled visa.”

Keep in mind

Any changes outlined in the Federal Budget must be passed by both the House of Representatives, which is controlled by the government, and the Senate, where proposed expenditures are subject to examination within Senate estimates hearings. This means any proposed cuts or changes outlined above may not necessarily become law.

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. 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. Commonwealth Bank is also not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.