Q: I am a small business owner and understand I may be entitled to additional tax benefits arising from this year’s budget. Can you please advise what the changes are and when they take effect?
A: There were 6 key measures that were announced in the May budget that broadly affect small businesses with aggregate annual turnover of less than $2 million. However, at the time of writing, not all of these announced measures had become law yet.
The cost of assets purchased for the business with a cost of $20,000 or less, can be immediately deducted as opposed to being depreciated over a number of years. The deductibility applies to eligible assets purchases from 13 May 2015 up until 30 June 2017.
Effective 1 July 2015, incorporated small businesses will be taxed at a new company tax rate of 28.5%. Companies with a turnover of more than $2 million will continue to be taxed at 30%. Despite this cut in the company tax rate for small businesses, franking credits will be maintained at 30% irrespective of the size of the company.
Unincorporated small businesses, will receive a 5% discount on the amount of tax payable on their business income – up to a maximum of $1,000.
From 1 July 2016, small business will receive Capital Gains Tax rollover relief when restructuring the business. This will remove the disincentive to restructure businesses to encourage longer term growth.
From 1 April 2016, the Fringe benefits tax exemption on qualifying electronic devices will be extended to more than one device.
Certain business start-up expenses, such as legal and accounting costs, incurred from 1 July 2015 can be claimed as an immediate tax deduction as opposed to being deductible over a five year term.