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14 May 2015

The Federal Budget and manufacturing



The 2015-16 Federal Budget has delivered a tax break for small businesses, money to promote trade and encouragement of foreign investment.

Small business

Small business is a big winner in last night’s budget, with Hockey announcing a $5.5 billion Jobs and Small Business Package aimed at helping businesses invest, hire and grow.

96 percent of Australian businesses will benefit from the package, which offers $5 billion in tax cuts for small businesses with annual turnover below $2 million.

Small corporations will have their company tax rate cut to 28.5 per cent. Unincorporated small businesses will benefit from a 5 per cent tax discount, up to $1,000 per year.

Starting Budget night and until the end of June 2017, the Government will provide small businesses with an immediate deduction for all individual assets costing less than $20,000. All small businesses will get an immediate tax deduction for every asset they buy costing less than $20,000. Currently, the threshold sits at $1,000. This $20,000 limit applies to each individual item. Small businesses can apply this $20,000 rule to as many individual items as they like.

Increasing the depreciation threshold will mean improved cash flow for small businesses. Any assets over $20,000 can be added together (‘pooled’) and depreciated at the same rate. These assets are depreciated at 15 percent in the first income year, and 30 percent per year thereafter. If the value of the pool is below $20,000 until the end of June 2017 it can be immediately deducted too.

The Government will reduce red tape in the Fringe Benefits Tax (FBT) system by ensuring all small business work‑related portable electronic devices are FBT free. Small businesses will also benefit from a new Capital Gains Tax rollover relief when changing their legal structures.

The Jobs and Small Business package also provides a helping hand to small business start‑ups by streamlining the business registration processes. Start-ups will also be allowed to immediately deduct professional expenses incurred when they start a business. Removing obstacles to crowd‑sourced equity funding will help promote small businesses access to finance. This will complement expanded tax concessions for Employee Share Schemes.

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