Budget 2015: Small Business
May 2015

Worth $5.5bn, the Small Business package aimed at stimulating business spending and employment falls short for larger SMEs, however micro businesses stand to gain.
Who benefits most from the Small Business package?
The Small Business landscape is comprised of many different business entities, however it's the micro businesses with less than $2m in turnover that stand to gain the most from the $5.5bn SME package.
Small businesses with a turnover of $2m or less make up 97.5% of all businesses in Australia, contribute approximately 11% of the tax take and well under half of these businesses paid net tax.*
* based on 2011/2012.
Date of effect: From 2015/2016 income year
The Government has announced tax reductions for small businesses with an aggregated annual turnover below $2m regardless of entity type.
For taxpayers operating through an unincorporated business structure (partnerships, trusts, etc.), they will receive a 5% tax discount on the income tax payable on business income received. The discount is capped at $1,000 per individual for each income year, and delivered as a tax offset.
For companies, the company tax rate will be reduced by 1.5% to 28.5%. Maximum franking credit rates for a distribution will remain unchanged at 30%.
It's important to remember that you need to make a profit to benefit from these changes. The last taxation statics released by the ATO showed that less than half of all businesses with this income level made a taxable profit.
Accelerated depreciation on purchases up to $20k
Date of effect: Between 7.30pm (AEST) 12 May 2015 and 30 June 2017
FBT holiday for portable electronic devices
Date of effect: 1 April 2016
Applying to businesses with and aggregated turnover of under $2m, this new measure will simplify the rules by removing the requirement for the devices to be substantially different.
This should address some of the uncertainty that has arisen when applying the rules to tablets, laptops, phones and other devices that are hard to distinguish from each other in terms of functionality.
Immediate deduction for professional costs setting up a business
Date of effect: Applies from 2015/2016 income year
As previously announced, start ups will be able to immediately deduct a range of professional expenses required to start up a business – such as professional, legal and accounting advice. Generally these expenses are deductible over 5 years.
CGT relief for changes to small business structures
Date of effect: Applies from 2016/2017 income year
Small business with an aggregated turnover under $2m will be able to change their legal structure without triggering CGT.
It is expected that this would allow a much broader range of restructuring options without triggering CGT. For example, a sole trader may be able to restructure their operations into a trust structure. Bear in mind that other tax issues may still need to be addressed on restructuring a business, particularly transfer duty.
More from the 2015 Budget:
- The "Have a Go" Budget
- Business in General
- International tax changes
- Superannuation & Pensions
- Families & Individuals
- Tax Compliance
- Economy in Brief
Follow Bates Cosgrave on Linkedin, Facebook or Twitter
Disclaimer
This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.
Share this
|
Get Small Business News each month