Federal Budget 2015 Snapshot
Federal Budget 2015 Snapshot

Small business is a sector that came out a clear winner from the 2015-16 federal budget delivered by the Treasurer Joe Hockey. Despite the lead-up mutterings that the budget was going to be “dull and boring”, there were nevertheless a few surprises contained in the pages of the budget papers.

Many key budget announcements that comprised the government’s small business package were leaked pre-budget and confirmed in the final budget papers. Details of the following are spelled out below, but they include:

  • a reduction in the small company tax rate to 28.5%
  • a temporary immediate write-off for capital assets acquired by small businesses
  • an immediate deduction for professional expenses associated with starting a new business; and
  • CGT roll-over relief for changes to an entity structure.

The measures that were previously unknown include:

  • while the 1.5% tax cut for small companies has been long expected, the government unexpectedly announced that the current maximum 30% franking credit would still be available to those companies’ shareholders. This should allay the fears of the small business community that the tax cut would merely have resulted in “mum and dad” shareholders of family companies paying the extra 1.5% in top-up tax.
  • The 5% discount on the tax liability of unincorporated small business entities was largely unanticipated. This caters for the vast majority of small businesses that are not companies. The budget papers were silent as to whether an individual who receives income from a trading trust is entitled to this discount. The devil will be in the detail once draft legislation is released.
  • The $20,000 threshold for the immediate write-off of capital assets is much higher than the $10,000 cap that has been widely speculated in recent weeks. The benefit however has a time limit, and only applies until June 30, 2017.

The budget contained a proposal for a so-called “Netflix tax” (that is, extending the GST to digital products and services imported by consumers in Australia). However, another rumoured GST change, to decrease the GST exemption threshold of $1,000 that applies to purchases of imported goods, did not make an appearance.

The Treasurer’s touted “Google tax” was also a notable absentee. In its place, the government plans to implement an anti-avoidance rule specifically directed towards very large multinationals. Other anti-avoidance announcements aimed at the same taxpayers illustrate intentions to “combat multinational tax avoidance”.

As promised, there were no new changes for superannuation and some adjustments for pension entitlement tests. There were few other notable budget impacts for personal taxation. The budget announcement which will have the most significant impact on middle Australia is the child care reform package.

Budget 15 infographic

Source: Taxpayers Australia Limited

These are the key takeaway points for the Federal Budget 2015 but there are many more important, for more information  or a copy of our full budget handout you can phone us on (03) 9999 7200 or contact us here.

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