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BUDGET 2015


THE RIGHT TIME FOR SMALL BUSINESS TO INVEST
An overview of the benefits of the budget for small business

1.       ACCELERATED DEPRECIATION

All small businesses will get an immediate tax deduction for any individual assets they buy costing less than $20,000. (Previously, the threshold sat at $1,000).

This $20,000 limit applies to each individual item. Small businesses can apply this $20,000 rule to as many individual items as they wish. These arrangements start from Budget night and continue until the end of June 2017. This will apply for assets acquired and installed ready for use between 7.30pm (AEST) 12 May 2015 and 30 June 2017. Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed in the small business simplified depreciation pool (the pool) and depreciated at 15 per cent in the first income year and 30 per cent each income year thereafter. The pool can also be immediately deducted if the balance is less than $20,000 over this period (including existing pools).

Small businesses can access accelerated depreciation for the majority of capital asset types. Only a small number of assets are not eligible (such as horticultural plants and in-house software). In most cases specific depreciation rules apply to these assets.

From 1 July 2017, the thresholds for the immediate depreciation of assets and the value of the pool will revert back to existing arrangements.

 

2.       TAX CUTS

The Government is reducing the tax rate for the more than 90 per cent of incorporated businesses with annual turnover less than $2 million. The company tax rate for these businesses will be reduced by 1.5 percentage points to 28.5 per cent.

Individual taxpayers with business income from an unincorporated business that has an aggregated annual turnover of less than $2 million will be eligible for a small business tax discount. The discount will be five per cent of the income tax payable on the business income received from an unincorporated small business entity. The discount will be capped at $1,000 per individual for each income year, and delivered as a tax offset.

 

3.   CHANGES TO THE FRINGE BENEFITS TAX SYSTEM FOR WORK-RELATED


ELECTRONIC DEVICES

There will be a fringe benefits tax (FBT) exemption from 1 April 2016 for small businesses with an aggregated annual turnover of less than $2 million that provide employees with more than one qualifying work-related portable electronic device, even where the items have substantially similar functions.

Currently, an FBT exemption can apply to more than one portable electronic device used primarily for work purposes, but only where the devices perform substantially different functions.

Removing the restriction that a tax exemption is only provided for one work-related portable electronic device of each type will remove confusion where there is a function overlap between different products (such as between a tablet and a laptop).

 

4.       WAGE SUBSIDIES TO SUPPORT EMPLOYMENT

Employers who offer job seekers an ongoing job can receive a wage subsidy with flexible payment arrangements.

The eligibility for the Youth Wage Subsidy will be expanded to include eligible job seekers aged 15 to 29 years of age after six months in job-active, with a start date of 1 November 2015;

Payments for the Restart Subsidy will be more accessible by allowing employers to receive the subsidy amount of $10,000 progressively over 12 months, rather than the 24 months;

 

5.       WORK EXPERIENCE FOR YOUNG JOB SEEKERS

The Government will provide $18 million over four years for around 6,000 job seekers annually to undertake valuable work experience for up to four weeks while they continue to receive income support.

 

6.       ALLOW IMMEDIATE DEDUCTABILITY FOR PROFESSIONAL EXPENSES

Currently, some professional costs associated with a new business start-up are deducted over a five year period. Businesses will be above to immediately deduct a range of professional expenses associated with starting a new business, such as professional, legal and accounting advice. This measure will be available to businesses from the 2015-16 income year.

 

7.       CAPITAL GAINS TAX ROLL-OVER RELIEF FOR CHANGES TO ENTITY STRUCTURE

Businesses with an aggregated annual turnover of less than $2 million to change legal structure without attracting a capital gains tax (CGT) liability at that point. This measure will be available for businesses that change entity type from the 2016-17 income year.

CGT roll-over relief is currently available for individuals who incorporate but all other entity type changes have the potential to trigger a CGT liability. This measure recognises that new small businesses might choose an initial legal structure that they later find does not suit them when the business is more established.

 

 

Source

Based on Commonwealth of Australia data “Budget 2015 - Growing Jobs and Small Business” Under Creative Commons BY Attribution 3.0 Australia licence

 

Disclaimer

Contents presented in this document are for information purposes only. All information on this document are
not intended to provide treatment of any subject dealt with and must be weighed solely as one factor in any investment or other decision made by or on behalf of any user of the information contained herein. Such user should consult its own investment or financial or legal or other advisors before making any decision.