Depreciation of assets
This is a big one. Small businesses could previously immediately depreciate assets less than $1,000. Items over this needed to be included in a depreciation pool that was capped at 15 per cent in the first year and 30 per cent in subsequent years. This threshold has been increased to $20,000 for businesses with an annual turnover of less than $2 million.
What does this mean for small business? Any asset under $20,000 can be immediately depreciated, increasing cash flow benefits for small business.
As an example, if you bought new office technology for your business – a few tablets, mobile phones and a gateway for the office – if the pool is below $20,000 you can immediately deduct these assets until the end of June 2017. The Government’s budget website states that “Time and time again the issue of accelerated depreciation arose as a barrier to investment” when consulting with small business.
Although this law is yet to be passed by the Government, it’ll apply to new purchases made between 12 May 2015 and 30 June 2017. So if you’re looking to invest in new technology for the team (or other assets for your business), next year could be the time to do it.
The company tax rate for incorporated businesses with an annual turnover less than $2 million will be reduced by 1.5 per cent (from 30 per cent to 28.5 per cent).
For businesses that are unincorporated (businesses that aren’t recognised as a separate legal entity to the members associated with it), the benefits are even greater: a five per cent tax discount from 1 July 2015, up to $1000 a year.
Fringe benefits tax
Looking to give your staff work mobiles, laptops or tablets to get them connected in the workplace or on the road? Previously, businesses would usually be unable to claim a fringe benefit tax (FBT) exemption on items that had a “substantially identical function” (like a tablet and laptop).
Changes to the FBT system mean that small businesses looking to provide workers with devices to get them connected on the road will face less red tape when it comes to exemptions. From July 1, all work-related portable electronic devices will be exempt from FBT.
In what will be good news for future muru-D applicants, Aussie budding entrepreneurs will also see benefits from the new Budget. It outlines how the Government will encourage start-ups and entrepreneurship, including streamlining the business registration process and tax concessions for Employee Share Schemes.
Of particular note, however, is that start-ups will be able to immediately deduct professional expenses incurred when they start a business, rather than writing them off over five years. This includes things like legal expenses.
This total value of the Jobs and Small Business package outlined in this year’s budget totals $5.5 billion, so there’s a lot to cover. It spans helping job seekers into work, youth employment and wage subsidies.
If you want to get a full breakdown, head to the budget website here.