2015 Budget...the BIG winner

Small businesses are the big winners in the 2015-16 budget. The cumulative total of the package is $5.5 billion. The main advantages they have received are detailed below.

Tax cut for small incorporated businesses

There will be a 1.5% tax cut for incorporated businesses with an annual turnover under $2 million, dropping the tax rate from 30% to 28.5%. Up to 780,000 or around 90% of incorporated small businesses are eligible for this tax cute. This tax cut applies from 1 July 2015 and is the lowest company tax rate for small businesses since 1967.

Tax rate for small unincorporated businesses

Most small businesses are unincorporated, operating as a sole trader, partnership or trust. The government is providing a 5% tax discount to unincorporated businesses with an annual turnover less than $2million from 1 July 2015.  This is capped at $1,000 per individual in an income year.

Asset deduction

The budget has changed the immediate deduction on assets from those costing less than $1,000 to those costing less than $20,000 purchased from the 2015 budget until the end of June 2017. This is a significant benefit to businesses and applies to all manner of goods from kitchen equipment, to computers, to cars. Essentially anything required to run a business can be claimed.

Measures to encourage start-ups and entrepreneurship

Start-ups have the option of immediately deducting professional expenses incurred as a result of starting a business. They do not need to write them off over five years. This means new businesses will enjoy immediate cash flow benefits.  Additionally expanded tax concessions for Employee Share schemes allow business owners to invest more of the company’s cash in growing the business.

Measures to cut red tape for small businesses

The government will expand the Fringe Benefits Tax for work related portable electronic devices. Moreover, small businesses will receive a Capital Gains Tax rollover relief when changing their legal structures but keeping the same owners.

Frank Legal can advise you on the most appropriate structure for your business, please click here for more information.

Written by Tim Cargill and Edited by Andrew Graham