Small Business are clear winners in the 2015 Federal Budget.

Q&C Accountants are pleased to be able to provide you with the below snapshot of the budget changes & how they may affect your business.

There are a raft of other changes in relation to Health, Care, Defence & business. We note that most of the budget measures discussed in last night’s budget still need to be passed through the Senate – meaning that while the Liberal Government have introduced these budget changes, they are subject to scrutiny by the 7 Individual Senate members & therefore may be delayed or never introduced.


1. WIN FOR SMALL BUSINESS – accelerated depreciation for small businesses

All small businesses have assets, this is BIG WINNER for small business – allow small businesses to claim an upfront deduction for assets acquired that cost less than $20k, or for asset pools with a value less than $20k, in more detail:

  • New Assets Less than $20k: Immediately deduct assets you start to use or install ready for use between 7.30pm (AEST) 12 May 2015 and 30 June 2017, provided the asset costs less than $20,000.
  • New Assets More than $20k: Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed in the small business simplified depreciation pool.
  • Existing Assets: Asset pool can also be immediately deducted if the balance is less than $20,000 (including existing pools).

This measure will potentially reduce your income tax by increasing the amount of depreciation deductions you can claim in your tax return.

2. WIN FOR SMALL BUSINESS – tax cuts for small business

LETS REPEAT TAX CUTS! – to all small businesses through a 1.5 percentage point tax cut for small companies and a five per cent tax discount on income from unincorporated small business activity.

How it may work:

Companies: Company tax rate to 28.5 per cent for companies with aggregated annual turnover less than $2 million. This is a 1.5% reduction.
Individuals (includes businesses trading via Trusts that distribute to individuals): Individual taxpayers will be eligible for a small business tax discount of five per cent of the income tax payable on the business income received from an unincorporated small business entity. The discount will be capped at $1,000 per individual for each income year, and delivered as a tax offset.

This measure will potentially reduce your income tax by decreasing the underlying tax rate.

3. WIN FOR SMALL BUSINESS – Immediate deductibility for professional expenses

Professional costs associated with a new business start-up like Company Setup Costs, Accounting fees, Legal fees are currently required to be deducted over a five year period.

The budget changes allows small business to immediately deduct these costs in their tax return. This measure will potentially reduce your income tax by increasing the amount of upfront deduction.

4. WIN FOR SMALL BUSINESS – Capital gains tax roll-over relief for changes to entity structure

Businesses currently trading as Sole Traders will be provided with a Capital Gains Tax exemption if they elect to move their business into a Trust or Company from the FY 2016/17 year. This provides small business with an incentive to begin operating from a Trust or Company rather than as a Sole Trader. I note that Stamp Duty may still apply. This measure is only relevant to growing small businesses operating as sole traders.

5. CHANGE IN CHILDCARE – Workforce Participation Stream

A new single Child Care Subsidy (CCS) will be introduced on 1 July 2017. Families meeting the activity test with annual incomes up to $60,000 (2013-14 dollars) will be eligible for a subsidy of 85 per cent of the actual fee paid, up to an hourly fee cap. The subsidy will taper to 50 per cent for eligible families with annual incomes of $165,000.

The CCS will have no annual cap for families with annual incomes below $180,000. For families with annual incomes of $180,000 and above, the CCS will be capped at $10,000 per child per year. The income threshold for the maximum subsidy will be indexed by the Consumer Price Index (CPI) with other income thresholds aligned accordingly. Eligibility will be linked to a new activity test to better align receipt of the subsidy with hours of work, study or other recognised activities.

6. PAID PARENTAL LEAVE SCHEME – Change to paid parental leave scheme.

Currently, some mothers can access parental leave payments both from the government scheme and from their employer, if their workplace has one. The government scheme, introduced by Labor in 2011, provides 18 weeks of leave at the minimum wage to primary care givers earning $150,000 a year or less.

The Government will remove the ability for individuals to double dip, by taking payments from both their employer and the Government.

More details are required on this one – but if your wife / defecto partner has an employer based paid parental leave scheme, they may be unable to access the Government PPL scheme.

We have relied on the information provided by the 2015 Budget Documentation – the above information is intended to be provided for generic information purposes only & should not be acted upon in isolation.

We recommend that you contact us before making any decisions in respect your business. We note that the above budget measures have not passed the Senate and maybe subject to change.