Sole traders to get a tax cut alternative in the Budget

May 2015

Sole traders have not been left out of the Government's small business package.

Businesses operating as sole traders look set to get some tax relief in the Federal Budget, according to an article that has appeared on the Australian Financial Review [paywall]. 

The Government has positioned its small business package as a win for SMEs, including a 1.5% tax cut for businesses with turnover of less than $2 million. However it appears that ensuring all small business owners, particularly sole traders, can access the same cuts has proven too difficult, hence an alternative for sole traders is likely to be included in next week's Budget. 

With just one third of SMEs incorporated as companies, the Government will consider an alternative to a tax cut for sole traders, such as an accelerated depreciation policy that allows them to write off up to $10,000 per year. 

Business groups have voiced concern at the idea of giving small businesses a 1.5% tax cut rather than one that cuts across the board, effectively creating a two-tier tax system for business. Most of the concerns appear to be around an increased administrative burden. 

Of course, the devil will be in the detail when the Budget is announced on Tuesday 12 May. 

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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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