The 2015-16 budget has been released, and small businesses have been the biggest winners.
If you are a small business entity with an aggregated annual turnover of less than $2 million you will be eligible for the following incentives:
Immediate deductions for assets costing less than $20,000
• Starts from 7:30 pm on May 12th, 2015, until the June 30th 2017.
• Each asset purchased costing less than $20,000 (excluding GST), is immediately deducted in the income year that the asset is first used or installed ready for use.
• Applies to both new and second-hand assets.
• Assets that cost $20,000 or more will continue to be deducted over time using a small business pool. Asset pools with a balance of less than $20,000 at the end of the 2015 to 2017 income year will be deductible.
Before you purchase any equipment for your business, make sure that the equipment has an immediate benefit for your business and your cash flow supports the purchase. If your business makes a loss and you start spending to take advantage of the immediate deduction, you are likely to increase the size of your losses with no corresponding offset.
Additional accelerated depreciation for primary producers
Primary producers can immediately deduct capital expenditure on fencing and water facilities such as dams, tanks, bores, irrigation channels, pumps, water towers and windmills. The cost of fodder storage assets such as silos and tanks used to store grain and other animal feed can be depreciated over three years. This will apply for expenditure incurred from 7.30 pm on May 12th 2015.
Tax cut of 1.5% for small companies
If your business is a company with an aggregated turnover of less than $2million, you will have your company’s tax rate reduced from 30% to 28.5% from July 1st, 2015.
Tax discount of 5% for small unincorporated businesses
Individual taxpayers will be eligible for a 5% tax reduction on business income from an unincorporated small business entity (sole trader, partnership or trust).
The offset will be 5% of the income tax payable on the business income received, and will be capped at $1,000 per individual in the income year. The measure is set to start from the 2015/16 financial year.
Encouraging start-ups
Currently, if you start a new businesses, you are unable to immediately deduct some costs considered capital in starting up a business. Costs such as professional fees, including legal and accounting, will now be immediately deductible in the income year the business was founded starting from the 2015-16 income year.
Enhanced access to business restructures for small businesses
Changes were announced that will enable small businesses with aggregated turnovers less than $2 million to change legal structure without incurring capital gains tax (CGT) liability.
However, be careful to ensure that you consider whether you are a small business entity before going ahead and trying to claim any of the above. The test takes into consideration the aggregate turnover from any business that you have control over. Best to check first.
Other areas in the budget worth mentioning are:
Pensions
The government estimates 170,000 pensioners with “modest” assets will receive about $30 more a fortnight with its changes. About 91,000 pensioners will no longer qualify for the pensions a result of tighter assets tests. They will keep their Commonwealth Seniors Health Card, in a policy that is likely to be seen as much fairer than 2014-15’s reform attempt.
Zone Tax Offset – exclude ‘fly-in-fly-out’
‘Fly in fly out’ and ‘drive in drive out’ (FIFO) workers will be excluded from the Zone Tax Offset where their normal residence is not within a ‘zone’.