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The Turnbull Government is committed to supporting hardworking small businesses.
Building on the Growing Jobs and Small Business package in the 2015-16 Budget, further changes are being introduced to reduce the tax burden on small businesses.
Below outlines some of the key ways in which the Government, through the tax system, is assisting small business. From tax cuts to immediate deductibility provisions and payment simplification methods; there are many benefits available to small business.
Together with the Government’s support for hardworking small businesses so far, these measures will help small businesses to innovate, grow and create Australian jobs.
If you would like to have your say on small business, complete my small business survey here.
Budget 2016-17: Supporting Hardworking Small Businesses
The Government will back small businesses by reducing their tax rate to 27.5 per cent, starting with businesses with a turnover of less than $10 million on 1 July this year.
The Government will decrease the tax rate for all companies to 25 per cent by 2026-27.
As many small businesses are not companies, the Government will also extend the unincorporated tax discount to unincorporated businesses with annual turnover of less than $5 million and increase the discount to 8 per cent on 1 July 2016, up to a maximum value of $1,000. After the initial increase, the discount will be increased in phases to a final rate of 16 per cent in 2026-27.
Over 3 million businesses will gain access to either the lower tax rate or higher discount in 2016-17.
Expanding access to small business tax concessions
The Government will extend access to a number of small business tax concessions by increasing the threshold for these concessions to $10 million, up from the current $2 million threshold. This will provide over 90,000 businesses with access to a range of small business tax concessions.
From 1 July 2016, all businesses with annual turnover of less than $10 million will have access to:
- simplified depreciation rules, including immediate tax deductibility for asset purchases costing less than $20,000 until 30 June 2017 and then less than $1,000;
- simplified trading stock rules, giving businesses the option to avoid an end of year stocktake if the value of the stock has changed by less than $5,000;
- a simplified method of paying PAYG instalments calculated by the ATO, which removes the risk of under or over estimating PAYG instalments and the resulting penalties that may be applied;
- the option to account for GST on a cash basis and pay GST instalments as calculated by the ATO; and
- other tax concessions available to small business currently, such as the Fringe Benefits Tax concessions (from 1 April 2017, the beginning of the next fringe benefits tax year) and immediate deductibility of professional expenses.
These threshold changes will not affect eligibility for the small business capital gains tax concessions, which will only remain available for businesses with annual turnover of less than $2 million or that satisfy the maximum net asset value test.
Lower taxes and expanded access to tax concessions will mean increased opportunity to grow a small business, employ more Australians and increase wages.
You can find further information on the Turnbull Government’s support for hardworking small businesses HERE (LINK TO BUDGET.GOV.AU).
Encouraging new businesses and innovation
Small business is the engine room of our economy and we are committed to encouraging more Australians to start a business.
- New start-ups can now immediately deduct professional expenses incurred when starting a business.
- It is now easier and more attractive for companies to attract and retain the best employees through better taxation arrangements for employee share schemes.
- Company taxes for small business are at their lowest since 1967.
Lower taxes for small business
The Coalition Government has reduced the tax burden on small businesses.
Small businesses with an annual turnover under $2 million had their taxes cut on 1 July 2015, and all other small businesses with a turnover less than $10 million will have their taxes cut on 1 July 2016.
- Incorporated small businesses with a turnover less than $10 million will benefit from a new company tax rate of 27.5% from 1 July 2016.
- Unincorporated small businesses with a turnover less than $5 million benefit from a 8% tax discount, up to $1,000 a year, from 1 July 2016.
Instead of paying higher tax, small businesses can reinvest in their business.
Immediate tax deductions to June 2017
Small businesses with an annual turnover under $2 million can invest in their business today by claiming an immediate tax deduction for each and every asset valued up to $20,000.
From 1 July 2016, all small businesses with an annual turnover under $10 million will be able to claim an immediate tax deduction for each and every asset valued up to $20,000.
This means that business assets under $20,000 – such as computers, tools, vehicles, printers and coffee machines can be immediately written-off.
All small businesses can continue to take advantage of the immediate tax deductions right up until the end of June 2017.
The National Innovation and Science Agenda
Australia is well placed to take advantage of new opportunities.
The Coalition Government’s National Innovation and Science Agenda is about creating a culture that backs good ideas and learns from taking risks and making mistakes. It will help drive the smart ideas that create business growth, economic prosperity and local jobs.
- We’re providing new tax breaks for early stage investors in innovative start-ups.
- We’re making existing Employee Share Scheme rules more user friendly.
- We’re reforming our insolvency laws, which currently put too much focus on penalising and stigmatising business failure.
- We’re supporting incubators which play a crucial role to ensure access to resources, knowledge and networks.
Making business easier
The Coalition Government is making life easier for small business, having already cut around 11,000 pieces of regulation and legislation, reducing paperwork costs by $4.5 billion in our first two years.
- Almost 450,000 small businesses will benefit from changes to the Pay As You Go tax thresholds, saving small business around $67 million each year in red tape.
- The 45,000 small businesses that have no GST reporting requirements no longer have to lodge a business activity statement.
- Business registration is being streamlined through a single online registration portal.
- Since 1 July 2015 small businesses have been able to access the Small Business Superannuation Clearing House, enabling small businesses to make all employee superannuation contributions in just a single payment, reducing red tape and compliance costs for small business.
- Small businesses changing business structures will get capital gains rollover relief.
New overseas markets
Free trade agreements with Korea, Japan and China create new opportunities for small business in growing overseas markets.
China is Australia’s largest trading partner and the China-Australia Free Trade Agreement (ChAFTA) will open significant opportunities for Australian businesses in the world’s second largest economy.
When in place, the ChAFTA will eliminate tariffs for 95 per cent of Australian goods exported to China.
The elimination of tariffs on key agricultural exports such as dairy, meat, wine, wool, seafood and horticulture, provide Australian small businesses with an advantage over our major agricultural competitors.
The agreement will also see the almost complete elimination of tariffs on manufacturing, resources and energy exports – a boost for Australia’s crucial services sector in China.
This means Australian businesses selling and expanding to China will be more competitive than ever before.
For further information visit: openforbusiness.gov.au
Protecting small businesses from unfair contracts
Small businesses, like consumers, can be vulnerable to unfair terms in standard form contracts and are often offered contracts on a “take it or leave it” basis. The Coalition
Government recently passed new protections protecting small businesses against unfair contracts worth up to $300,000, or $1 million for a contract longer than 12 months.
New initiatives for small business:
- New sources of finance through Crowd-Sourced Equity Funding.
- A small business advocate in the Australian Small Business and Family Enterprise Ombudsman.
Support for small business
The Australian Government provides multiple avenues of assistance and support for small business.
I would encourage you to make use of the helplines and explore the programmes available at business.gov.au to help grow and strengthen your business.
Business.gov.au 13 28 46
Austrade 13 28 78
Fair Work Ombudsman Small Business Priority Helpline 13 13 94
Australian Taxation Office ato.gov.au
Dept. of Communications Digital Business digitalbusiness.gov.au