For the purpose of this Budget update, a small business is a business that holds an ABN and has a turnover (gross sales) of less than $2m.
$20,000 IMMEDIATE WRITE-OFF
(effective 12 May 2015 to 30 June 2017)
Small businesses that purchase plant and equipment which is used in running their business and valued up to $20k, can claim an immediate tax deduction, ie. this amount will be deducted as an expense to the business.
What qualifies for this write-off?
Any item used in the normal course of running your business, with the exception of horticultural plants and in-house software, will qualify, eg. printers, photocopiers, tools, solar panels, air conditioning, security systems, carpets, white goods, furniture, machinery and motor vehicles.
What if the item being purchased costs greater than $20,000?
This equipment will not qualify for the immediate write-off but will still be able to be depreciated under the normal depreciation rules.
(effective 1 July 2015)
- Companies that are small business entities will have their tax rate reduced from 30% to 28.5%.
- Small businesses that are not a company, ie. sole traders, partnerships and trusts, will receive a 5% tax discount provided to individuals who receive business income from these unincorporated entities. This discount will be paid as a tax offset and capped at $1k per individual per year.
CGT ROLLOVER RELIEF
(effective 1 July 2016)
Traditionally, if a business chooses to restructure eg. converting from a company to a trust, such an event would trigger a Capital Gains Tax event.
From 1 July 2016, a small business restructure will attract the option to CGT Rollover Relief.
If further clarification, or more information on these incentives is required, please do not hesitate to contact us.