Hockey creates budget for small business

Hockey creates budget for small business

JUNE 2015 | Sam Horsmann, Business Principal, PJS Financial

THE RECENT Abbott Government’s budget has been targeted at providing small businesses with opportunities to grow and included a number of significant changes that are specifically for small businesses. To be able to take advantage of these, a small business needs to have an annual turnover of less than $2 million. The announced but not yet enacted changes are:

Small Business Tax Cut/ Discount
The Government announced that for those small businesses that operate as companies their tax rate will now be 28.5% rather than 30%. And for those small businesses that aren’t incorporated they will receive a 5% discount on the income tax payable from their business.

The discount will be capped at $1,000. This will apply from the 1st July 2015.

Small Business accelerated depreciation write-off
By far the biggest headline from the budget was the accelerated depreciation write off. This change allows small businesses to immediately write off any new asset purchase of less than $20,000 rather than depreciating it over the items life time.

The $20,000 is per asset and can be for second hand or brand new items.

This change applies for assets acquired after 7:30pm on 12th May 2015 and before 30th June 2017.

Immediate write off of start up costs
Small businesses starting up will be able to write off the cost of lawyers, accountants and consultants immediately. Currently these start up costs are written off over 5 years. This is available for costs incurred after 1 July 2015.

Capital Gains Tax roll over relief changing entity structures
This change enables small businesses to change their business structure without incurring capital gains tax.

That is a business can be rolled over from a partnership to a trust without any capital gains tax payable, provided certain conditions are met. This change comes into effect from 1 July 2016.

Primary Producers
A change that doesn’t just apply to small businesses but in fact any Primary Producer is the accelerated depreciation on water facilities (dams, tanks, irrigators, pumps etc.) and fencing. Water facilities can be written off immediately, rather than 3 years and new fencing can also be written off immediately rather than 30 years.

In addition fodder storage items (silos and bins etc.) can be written off in 3 years rather than 50. These changes apply to assets purchased after 12th May 2015.

N.B The above information is general in nature and should not be taken as tax advice.