Budget 2015: Small Business Wins!
Category : Practice Updates
Expanding accelerated depreciation for small business
From Budget Night 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 for assets acquired and installed ready for use between 7:30pm (AEST) 12 May 2015 and 30 June 2017.
Tax cuts for small business
From 1 July 2015 (i.e. 2015/16 income year) the government will deliver tax cuts of 1.5% for small companies and 5% discount on income tax payable for unincorporated small business activity.
- Reduction in company tax rate – The company tax rate will be reduced to 28.5% (i.e. a reduction of 1.5%) for companies with an aggregated annual turnover of less than $2 million. Companies with an aggregated annual turnover of $2 million or above will continue to be subject to the current 30% rate on all their taxable income.
- 5% discount on tax payable for other taxpayers – 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 5% of the income tax payable on the business income received by an unincorporated small business entity. The discount will be capped at $1,000 per individual for each income year, and will be delivered as a tax offset.
Immediate deduction for professional expenses on commencing a new business
Currently, some professional costs associated with commencing a new business are deducted over a five-year period.
From 1 July 2015, the government will allow businesses to claim an immediate write-off for a range of professional expenses associated with starting a new business, such as professional, legal and accounting advice.
CGT roll-over relief for changes to entity structure
CGT roll-over relief is currently available for individuals who incorporate, but other entity type changes have the potential to trigger a CGT liability. 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.
Accelerated depreciation for primary producers
Currently, the effective life for fences is up to 30 years, water facilities is three years and fodder storage assets is up to 50 years. For income years commencing on or after 1 July 2016 (i.e. from the 2017 income year), the government will allow all primary producers to:
- immediately deduct capital expenditure on fencing and water facilities such as dams, tanks bores, irrigation channels, pumps, water towers and windmills; and
- depreciate all capital expenditure on fodder storage assets such as silos and tanks used to store grain and other animal feed over three years.