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2015 Federal Budget – What it means for your small business Posted on October 9, 2018


Prime Minister, Tony Abbott says small business is “the vital beating heart of a strong economy”. That be so, but it seems that it will take a lot more than the minimum 1.5% tax cut flagged by the federal government to get the sector’s pulse racing.

While small business groups and analysts say any tax relief is welcome, they warn that to revitalise activity the government needs to embrace a more ambitious and comprehensive reform agenda to transform the commercial environment. 

They have handed the government a long list of suggestions that include more generous investment and innovation incentives, reduced compliance costs and more favourable financing arrangements – some of which will come cheap.

Australia’s 2 million small businesses have won a $5.5 billion bonanza focused around generous tax breaks the government hopes will stimulate the economy.

Under the most generous measure, small businesses will be able to claim an unlimited number of tax deductions for buying cars and machinery valued at less than $20,000 each.

As long as it’s not stock, businesses can claim almost any item.

Treasurer, Joe Hockey says, “We recognise that small business, in order to succeed, needs better cash flow and better tools for innovation. This will be of enormous benefit to their bottom line and help businesses with their cash flow.

If you run a cafe, it might be new kitchen equipment, or new tables and chairs. If you’re a tradie, it might be new tools or a computer for the home office.”

Items worth $20,000 or more can also be claimed but will go into a pool and get depreciated at 15% in the first income year and 30% each year after that. The accelerated depreciation measures will cost $1.8 billion over four years.

From July 1 2015, up to 780,000 small companies with annual turnover of less than $2 million will have their tax lowered from 30% to 28.5%.

Following the Coalition’s unpopular move last budget of scrapping the instant asset write-offs for small business introduced by the former Labor government (as it was linked to the mining tax), the government has now embarked on a spending spree, with one of the most generous packages ever delivered to small business.

The government will give a 5% tax discount, capped at $1000, for 1.5 million sole traders.

The government will also allow an FBT exemption from April 1, 2016 and for small businesses with annual turnover of less than $2 million that give their employees more than one qualifying work-related portable electronic device, even if it performs the same function (such as a tablet and a laptop). The government has not costed the measure in the budget and said it was designed to remove confusion about products that can be claimed.

The package will also give funding to start-ups and entrepreneurs, in addition to already announced tax changes to employee share schemes.  These include allowing small businesses to change entity structure – such as a sole trader to a trust – without getting hit with capital gains tax (costing $40 million over four years) and allowing them to immediately deduct legal and tax advice associated with starting a new business (costing $30 million over four years).

Then there is $19 million over four years in measures aimed at helping employers take on unemployed job seekers, $25 million in measures encouraging job seekers to look for work and $331 million for “disengaged youth” to become “job ready”.

For more information on how the federal budget changes might affect you and your business, click here to speak to one of our accountants.

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Get in touch with our team today and learn how you and your business can grow to the next level. From structuring to sustainability, we'll help you reach your financial goals and live the lifestyle you deserve.

be better off.