Last week the Federal Government introduced legislation into Parliament to give effect to its Enterprise Tax Plan, announced earlier in this year’s Federal Budget.
Whilst the headline act is the proposed reduction in the corporate tax rate to 27.5% this year, reducing to 25% for all companies over the next ten years, we believe the most important change to be the proposed increase in the annual turnover threshold from $2 million to $10 million for businesses to qualify as a Small Business Entity.
This change is proposed to apply from 1 July 2016 which would immediately offer the following benefits and concessions to a raft of businesses who currently turnover more than $2m but less than $10m and still consider themselves to be “small” businesses.
Concessions such as:
- The up to $20,000 immediate deduction for Plant & Equipment acquired before 1 July 2017;
- A maximum $1,000 tax discount for Individuals who receive small business income as a sole trader, partner or beneficiaries of a Trust;
- A 27.5% corporate tax rate for the 2017 financial year;
- Immediate deductions for prepaid expenses and certain business start-up expenses;
- The choice to account for GST on a Cash Basis, rather than Accruals;
- A number of specific FBT concessions; and
- A restricted ATO amendment period of 2 years.
It remains to be seen how successful the Government will be in getting some or all of their Enterprise Tax Plan measures passed, however given the $2 million turnover threshold has been in place since 2007, it is not unreasonable to increase the threshold now to enable more “small” businesses to access the so called Small Business Entity Concessions.
If you would like to know whether your business will qualify for these concessions, contact us on 1800 803 017!
