Budget 2015: What's in it for business? 

May 2015

Small business and "innovative" start ups are expected to be a focus in the upcoming Budget with a small business package.  

The Prime Minister recently announced that the planned 1.5% company tax rate reduction will be scrapped for all but small business.  Small business is expected to be a focus in the upcoming Budget with a small business package.  

It's also likely that research and development to foster "innovative" start-up initiatives will receive a boost.   Treasurer Joe Hockey has said that, "there are a number of things we can do to help start-ups and we'll be saying more about that in the upcoming Budget."

GST on online purchases and services 

To increase GST revenue, the Government has the option of trying to force through a GST rate increase with State and Territory approval or broaden the base. High on the list is applying GST to revenue earned from online and digital businesses.

On 9 April, Treasurer Joe Hockey said, "GST should be charged at the source, so a company providing intangible services into Australia, such as media services or so on, wherever they are located they should charge GST on those services." 

That is, if you are an Australian resident and purchase a good or service then tax should apply in Australia as opposed to where the business is domiciled.  

This issue is likely to be broader than just the $1,000 threshold for goods purchased from overseas and Netflix but a review of how tax applies to intangibles.  It's a question of when these measures will apply - either in the Budget or as part of the broader tax review.

'Googletax' or Multinational tax crackdown

The Treasurer has said that, "It is vitally important, vitally important that a business, wherever it is located, pay tax in the jurisdiction where it earns the income." In April, the UK introduced a 25% tax on diverted profits created by activity in the UK.  

While the so-called Googletax has been shelved, the intent is to "... target large multinational enterprises with business activities in the UK who enter into contrived arrangements to divert profits from the UK by avoiding a UK taxable presence and/or by other contrived arrangements between connected entities." The new tax rules apply to entities with sales revenue in the UK greater than £10m.  

Before the decision to drop the tax was announced, the search giant itself responded in light-hearted, but pointed banter, suggesting that they are happy to pay tax in Australia if "…Australian people are entirely comfortable getting on Altavista or finding wherever the good hell Jeeves is and asking him to answer every dumb thought you have."

"Sure, we have a history of not paying our due taxes but how did you find out about that history? Did you Bing it? I bet you didn't. You know how I know? If you had used Bing you wouldn't have found out about it."

Tax on bank deposits 

The Assistant Treasurer has indicated that a bank deposits insurance tax will be introduced to create a fund to protect against a collapse of the banking industry. The concept was previously announced by Labor prior to the 2013 election.   

Also this month:

Budget 2015: Who is in the firing line?

Budget 2015: What's in it for families and individuals?

Budget 2015: Contributing to super - what you need to know



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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.

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