The Abbott Government announced a small business package designed to stimulate the sector through tax cuts and incentives for owners to invest in their businesses.
For the purpose of the new concessions, a small business is defined as an entity (individual, trust or company) which operates a business with an annual turnover of less than $2,000,000 (when aggregated with the turnovers of its associated entities).
From 1 July 2015, the company tax rate for small businesses will reduce from 30% to 28.5%. The maximum franking credit rate for a dividend declared by a company will however remain unchanged at 30%.
Tax concessions will also extend to individuals who derive business income through unincorporated structures (sole traders, partnerships, trusts), as they will receive a 5% discount on the amount of tax payable (capped at $1,000 per year).
Accelerated Depreciation - immediate asset write-off up to $20,000
Small businesses will be able to claim an immediate tax deduction for assets purchased for less than $20,000 from 12 May 2015. This concession will continue until 30 June 2017.
It should be noted that the $20,000 threshold applies on a per asset basis.
The immediate write-off will be available for the majority of capital asset types, including cars, machinery and equipment.
Immediate Deduction for Professional Costs in Setting up a Business
An immediate deduction will be available for the professional expenses required to start up a new business, such as accounting and legal fees.
These costs were previously deductible over a 5 year period.
CGT Relief for Changes to Business Structure
From 1 July 2016, small businesses will be able to change their legal structure without attracting a Capital Gains Tax liability.