There is finally good news for some businesses in the lead up to the new Federal Budget being handed down in May. Items flagged in last year’s budget are finally progressing through the Government and the Senate. This includes company tax cuts and the ability for more businesses to access the small business tax concessions.
Legislation containing the proposed tax cuts for companies – bringing company tax down to 27.5% – has now been passed however it is limited to companies with under $50m turnover. The company tax cuts were intended in last year’s budget to apply progressively to all companies, however objection from opposition parties and deals made to pass the legislation resulted in the tax cuts being limited to small and moderate sized businesses.
For the 2016/17 year (this tax year) it will be limited to companies with less than $10m, for the 2017/18 year the threshold will raise to $25m turnover then $50m from the 2018/19 year onwards. The tax rate will gradually decrease from 27.5% to 25% from the 2025 to 2027 years.
Importantly, the new legislation also includes the budget proposal to increase access to the small business tax concessions (excluding CGT) to $10m from 1 July 2016. This means, for example, companies with between $2m and $10m turnover will be able to obtain an immediate write-off for depreciable assets acquired prior to 30 June. This is great news for a large number of businesses and should factor into business planning strategies for the 2017/18 financial year. Small business owners should contact their adviser to discuss these changes and how they can take advantage of this immediate stimulus prior to 30 June.
The legislation also progressively increases the small income tax offset for sole proprietors (eventually to 16% by 2027) and raises the threshold to $5m turnover. Another great win for small business!
Contact Prosperity on 1800 855 844 or firstname.lastname@example.org if you would like to know how these changes can benefit your business.