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Federal Budget 2015 – A Snapshot for Business

federal budget 2015

A Snapshot of the Budget Affecting Business

 

Small business

  • The company tax rate for incorporated businesses with annual turnover up to $2 million will fall by 1.5 percentage points to 28.5 per cent from 1 July, 2015. Unincorporated businesses such as sole traders and partnership structures with annual turnover up to $2 million will receive a 5 per cent tax discount, capped at $1000, through their year-end tax returns from 1 July, 2015. This will cost the Government $3.3 billion in the period to the end of the 2018-19 financial year.
  • A temporary measure will allow small businesses with turnover below $2 million to get an immediate tax deduction for every asset they acquire that is valued up to $20,000 for tax purposes – up from $1,000 previously. This will apply from Budget night until the end of June 2017 and cost $1.8 billion.
  • Capital gains tax rollover will be reformed to enable small business to change the legal structure of their business from the 2016-17 financial year without incurring capital gains tax. Rollover relief is currently available for individuals who incorporate but all other changes of entity type trigger a capital gains tax liability.
  • A fringe benefits tax (FBT) exemption will apply from 1 April, 2016 for all businesses with an aggregated annual turnover of less than $2 million that provide employees with more than one portable electronic device, even where the devices have substantially similar functions. Currently, an FBT exemption only applies to more than one device if the devices perform substantially different functions.
  • The Government will release a consultation paper later in 2015 on potential changes to the Corporations Act to reduce any unnecessary regulatory requirements for small business.

Start-ups

  • Start-ups will be able to immediately deduct professional expenses incurred when they begin a business, such as legal costs, rather than writing them off over five years. This will cost the Government $30 million.
  • The Government will provide $7.8 million over four years to the Australian Securities and Investments Commission to implement and monitor a regulatory framework to facilitate the use of crowd-sourced equity funding, including simplified reporting and disclosure requirements.
  • Tax concessions for employee share schemes announced in the Mid-Year Economic and Fiscal Outlook 2014-2015 will be expanded after consultations on the draft legislation identified minor technical changes that could be made.

Big business

  • The Government plans to work with business to develop a voluntary code for greater public disclosure of tax information by large companies.
  • A new tax avoidance law will be introduced in Part IVA of the Income Tax Assessment Act 1936 aimed at approximately 30 multinational companies with global revenue of $1 billion or more that artificially avoid having a taxable presence in Australia. It will apply from 1 January, 2016.
  • The Government will double the maximum administrative penalties that can be applied to companies with global revenue of $1 billion or more that enter into tax avoidance and profit shifting schemes. It will also implement the OECD’s new transfer pricing documentation standards from 1 July, 2016.
  • A retrospective cap of $100 million will apply to the amount of research and development expenditure for which companies can claim a tax offset at a concessional rate. Expenditure beyond the $100 million cap will receive a lower offset at the company tax rate. This measure will apply to assessments for income years commencing on or after 1 July, 2014.

GST

  • Subject to the unanimous agreement of the States and Territories, GST will apply to digital products and services – for example, Netflix – from 1 July 2017. This will raise $350 million in the period to the end of the 2018-19 financial year.

Infrastructure

  • The Government will establish a concessional loan facility of up to $5 billion for private sector investment in infrastructure such as ports, railways and pipelines in Northern Australia. The loan facility will be open for applications from 1 July 2015.

Families, childcare and pensioners

  • The Government is aiming to achieve savings of $967.7 million over four years by removing the ability of people to “double dip” to get paid parental leave from both the Government and their employers.
  • It is delivering a $4.4 billion Families Package, including $3.5 billion over five years on child care assistance, a new simplified Child Care Subsidy from July 2017, a $869 million Child Care Safety Net for disadvantaged children and $843 million for preschool programs.
  • Changes to the asset free areas for pensioners from January 2017 will allow 170,000 pensioners with modest assets to receive a full or increased pension, but an increase in the taper rate from $1.50 to $3 will mean those with substantial assets of up to $1.2 million who are currently on part pensions will receive a smaller pension or none at all.

Prepared by Pacific Finance Australia

 

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