Tax Accountant Mulgrave – Implication of Budget 2015 for Small Businesses
- Tax cuts
Reduced corporate tax rate for small companies – The Government will deliver 1.5% tax cut for small companies with an aggregated annual turnover of less than $2 million, effective from 01st July 2015. This means a reduced company tax rate of 28.5% from the financial year 2015-16.
5% discount on tax payable for small unincorporated businesses The Government will deliver a 5 per cent tax discount, capped at $1000 for small businesses that are unincorporated with an annual turnover of less than $2 million, such as sole traders and trusts. This will be delivered as a tax offset.
- Accelerated depreciation
The government will allow small businesses with an aggregated annual turnover of less than $2 million to immediately deduct assets they start to use or install ready for use, provided the asset costs less than $20,000. This will apply to assets acquired and installed ready for use acquired from 7.30pm on 12 May 2015 until 30 June 2017. This will replace previous instant asset write-off threshold of $1000.
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% in the first income year and 30% 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). From 1 July 2017, the thresholds for the immediate depreciation of assets and the value of the pool will revert back to existing arrangements.
The Government will suspend the current ‘lock out’ laws for the simplified depreciation rules until 30 June 2017, allowing small businesses to re‑enter the simplified depreciation regime if they have previously chosen to opt-out and locked out for 5 years.
- Immediate deduction for professional expenses
Currently, some professional costs associated with a new business start-up are deducted over a five year period. From 01st of July 2015, the government will allow businesses to claim an immediate deduction for a range of professional expenses associated with starting a new business, such as professional, legal and accounting advice.
- CGT Rollover relief for changes to entity structure
From 1 July 2016, the government will allow small businesses with an aggregated annual turnover of less than $2 million to change legal structure without attracting a CGT liability at that point. However, small businesses can only apply changes to the legal structure once only.
Please remember your Tax Accountant Mulgrave – MAS Tax Accountants is here to help you get ahead! Also remember these laws are propsoed and have not passed into law as of todays date (26/05/2015) so please give your Tax Accountant a call on 1300 627 829
