Budget 2016: A Budget for Small Business

May 2016

Treasurer Scott Morrison delivered his first Federal Budget for 2016/17 this week and with a broad focus on small business, super and targeting multinationals, it would seem that Budget 2016/17 is heavily focused on providing small business with a shot in the arm.

The Budget's broad targets are intended to boost business and innovation and the narrow revenue targets of the wealthy and multinationals. Big and crafted for the long-term, it's designed to generate enough pre-election glow anchored in structural measures to rein in spending and reduce concessions. 

From one perspective, the Budget contains broader measures to boost business, investment and innovation, including tax cuts and a number of tax measures designed to enable and free up alternate funding and investment for business.

From the opposing end, there are significant reforms that are intended to restrict access to superannuation concessions – some of the biggest changes since 2007 - in addition to cracking down on the multinationals that divert profits offshore. To police the new revenue measures, the Australian Tax office will get an extra $6.679 million to establish a new Tax Avoidance Taskforce.

While many business owners are warming to the budget, there are broader community concerns around housing affordability, the official cash rate cut and the lack of measures for less well-off Australians. Raising the threshold for higher income earners from $80,000 to $87,000 has been welcomed, however 75% of taxpayers have missed out on any personal tax relief

For entrepreneurs, the Budget is being seen as a missed opportunity to support start-ups with no new initiatives or funding for start-ups and other innovative businesses. Almost all measures have been previously announced.

So has the Government delivered a 'fairer' budget this year? Possibly, but it does little to address the revenue issues it continues to face nor does it address the ballooning deficit. Still, it's a budget to take to an election and smart cookies as they are, the Budget allows for a $1.6 billion "decisions taken but not yet announced" election war chest.

What's in the budget for Business?

  • Company tax rate reduced to 25% over 10 years
  • Increase in tax discount for unincorporated small business to 16% over 10 years
  • Small business entity threshold increase to $10m from 1 July 2016
  • $1k GST exemption on imported goods abolished from 1 July 2017
  • UK style diverted profits tax to reign in multinationals

 What's in the budget for individuals?

  • 32.5% personal income tax threshold increase to $87,000 from 1 July 2016
  •  Subsidies to create employment path for unemployment youth


  • $500,000 lifetime non-concessional contributions cap from Budget night
  • Reduction in concessional contribution cap from 1 July 2017
  • Tax exemption on earnings supporting transition to retirement income streams (TRIS) removed from 1 July 2017
  • 30% tax on super contributions of high income earners extended
  •  Tax free super balances capped at $1.6m from 1 July 2017

More Information

For more information about the 2016 Federal Budget and how it impacts you or your business, contact us on 02 9957 4033. 

Budget 2016

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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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