Proactive - Accounting Solutions

2015 Budget Update

Small business owners are the big winners with a lot to be happy about after Joe Hockey’s 2015 Budget on the May 12th 2015 which announced a “Growing jobs and Small Business Package”. The two biggest highlights in this package included tax cuts on business income and the ability to immediately write-off business assets up to $20,000. Below is a brief summary of the key Budget points that may affect you.

SMALL BUSINESS TAX RATE CUT TO 28.5% FROM 1 JULY 2015
The key change is a tax cut. Small business company tax will be reduced by 1.5% to 28.5% from 1 July 2015. Although the tax rate has been reduced the Government has advised the rate of franking credit will remain at 30%. For small businesses not run through companies, there will be a 5% tax offset on business
profits capped at $1,000 per individual for each income year.

SMALL BUSINESSES CAN IMMEDIATELY WRITE-OFF ASSETS UP TO $20,000
One of the biggest surprises from the budget was that small businesses with less than $2m of turnover can immediately write-off assets including cars, equipment and machinery, if it cost less than $20,000. This includes both new and second hand assets. Assets exceeding $20,000 can be depreciated at 15% in the first year and 30% thereafter. These rules will apply from Budget night until 30 June 2017.

SMALL BUSINESS STARTUP’S GET IMMEDIATE DEDUCTION FOR PROFESSIONAL FEES
From 1 July 2015 professional expenses such as accounting and legal advice when starting up a new business is now immediately deductible. Previously it was deducted over five years.

DROUGHT RELIEF FOR FARMERS
From budget night on 12 May 2015, Primary Producers will be allowed to immediately writeoff new capital expenditure on fencing and water facilities and claim depreciation over three years for fodder storage facilities.

CGT ROLL OVER RELIEF FOR CHANGE OF ENTITY STRUCTURE
Small Businesses that wish to change their structure will be able to do so from 1 July 2016 without incurring a Capital Gains Tax (CGT) liability. Currently, the only restructure relief is from an individual, partnership or trust to a company. Going forward, changes should be able to be made to other structures
(e.g. individual to trust). There will still be stamp duty considerations that should be quantified before any change is made.

NO FBT ON WORK RELATED ELECTRONIC DEVICES
From 1 April 2016, small business will be able to provide more than one portable electronic device to be used primarily for work without incurring a fringe benefits tax liability.

REMOVAL OF METHODS FOR CALCULATING WORK RELATED CAR EXPENSES
From 1 July 2015 two uncommon methods of calculating work-related car expenses “12% of original value” method and “one-third of actual expenses” method will be discontinued. Further, the cents per kilometre method will be reduced to a single rate of 66 cents per kilometre regardless of engine size.

ZONE TAX OFFSET CHANGES TO EXCLUDE FIFO WORKERS
The zone tax offset is designed to compensate people who live in remote areas for additional costs associated with living in that area. Fly in Fly Out (FIFO)  Workers who work, but do not actually reside within a ‘zone’, will no longer be eligible for a ‘zone’ tax offset from 1 July 2015, therefore better targeting the offset to those who most require it.