The Government and Senate reached a consensus on Friday 31 March 2017, to pass tax reductions for certain companies and broaden access to tax concessions previously only provided to businesses with a turnover under $2M.
These changes come into force for the current 2017 financial year and may assist any decisions you make and their tax impact.
Small Business Tax Concessions Extended
The Legislation allows small businesses, with aggregated turnover of less than $10M, to access most small business tax concessions. The current $2M threshold is retained for access to the Small Business Capital Gains Tax Concessions.
Key features of the new law apply to Small Business Entities with aggregated turnover of less than $10M and include the following small business tax concessions:
- Immediate deductibility for small business start-up expenses;
- Simpler depreciation rules, the ability to “Pool” assets to accelerate depreciation and immediate write off for assets acquired under $20,000 (net of GST)
- Simplified trading stock rules
- Roll-over for restructures of small businesses
- Deductions available for prepayments of certain business expenses e.g. overhead operating costs
- Accounting for Goods and Services Tax (GST) on a cash basis
- Annual apportionment of input tax credits for acquisitions and importations that are partly creditable
- Paying GST by quarterly instalments
Small Business Income Tax Offset Adjusted
The Legislation increases the small business income tax offset for eligible individuals from 5% to 8% that relates to their total net small business income. This rate of offset, which is a non-refundable offset, will be applied for the 2017 to 2024 financial years. The maximum benefit of the offset to individuals has been retained at $1,000. This offset provides benefits for individuals in business, partners in trading partnerships and beneficiaries of trading trusts and is limited to those enterprises with an aggregated turnover of less than $5M during the 2017 financial year.
Reduction of Company Income Tax to 27.5%
This was a contentious issue in the Legislation with effect in the 2017 financial year. The reduction in this year is only available to a small business entity, i.e. a trading company with an aggregated turnover less than $10M. The concession to the lower tax rate does not apply to non-trading or purely investment companies.
For 2018 and subsequent years there is a new description applied to a second group of companies, i.e. Base Rate Entities and the 27.5% tax rate will be applied to companies with a aggregated turnover of less than $25M.
These changes are a major bonus for businesses in the $2M to $10M turnover range and will provide opportunities for significant tax savings for the current and future financial years.
Contact your Accountant at Powers to find out what these changes mean for you.
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The most recent figures show the ATO made only 92 Funds non-compliant during the 2014/15 financial year. With more than 556,000 SMSFs in existence and a 2.5% ACR lodgement rate, there is a 0.07% chance a Fund with a reportable breach will get taxed at the highest marginal rate.Read More›
The Rural Assistance Package is a total of $36M over five years from the 2016 financial year, designed to assist rural producers across Queensland affected by debt and drought. The extension of the family farm transfer duty exemption will finally bring Queensland into line with the exemptions available in some other States.
Under the exemption as it currently stands, no duty is payable on the transfer of farm land and associated livestock, plant and equipment between members of a family to the extent that the transfer is by way of a gift. In practice, this has significantly limited the availability of this exemption and farming families have had to pay large amounts of duty to implement their succession plans.Read More›
One of the more common thoughts I face with new clients is the concept of mistrust of Superannuation in general. Such phrases as, “They keep changing Superannuation, so I don’t want to be caught out”, “I don’t believe in Super”, or “The Government’s just going to take my Superannuation anyway”, are very common thoughts among pre-retirees and retirees.
Add to this the current Government, where the party room is not necessarily all on the same page with acceptance of Superannuation changes in the recent 2016 Federal Budget and one can understand some of this thinking that Superannuation, as a structure, is flawed.
However, my view is that perhaps we should not be throwing the baby out with the bath water…Read More›
Breaks for small businesses announced in the 2015 Federal Budget
Australian small businesses are the greatest winners in the Federal Budget 2015.
Costing the Government $5.5BN, the initiatives introduced for small business are intended to have a greater impact, as the government hopes these generous tax breaks will stimulate the economy.Read More›
The Rolling Stones Classic “Satisfaction” starts with:
I can’t get no satisfaction
‘Cause I try and I try and I try and I try