The Budget has introduced a number of measures for small businesses designed to revive investment and support entrepreneurship and startups.
Tax cuts
The Government has followed through with its announced 1.5 per cent tax cut for small businesses with an annual turnover of less than $2 million, which will take effect from 1 July 2015. The Government will also provide a 5 per cent tax discount (capped at $1000) for small businesses that are unincorporated with an annual turnover of less than $2 million, such as sole traders and trusts.
Accelerated depreciation
Businesses that invest in new tools or machinery will receive an immediate tax deduction for any individual assets under $20,000 from 12 May 2015 until 30 June 2017. Currently, the threshold sits at $1,000. They can apply the $20,000 limit to as many individual items as they wish.
Assets that extend the $20,000 limit will be added to the entity’s small business pool and depreciated at 15 per cent in the first income year and 30 per cent each income year thereafter. These were the current rules for assets costing $1000 or more. The Government will also suspend the current lock-out laws for the simplified depreciation rules. These will prevent small businesses from re-entering the simplified depreciation regime for five years if they opt out until 30 June 2017.
Measures encouraging business startups
In order to encourage business start-ups, business registration processes will be streamlined through the creation of a single website (business.gov.au), which allows new businesses to register using a one key identifier. The new online portal will be implemented by mid 2016. The Government will also change the regulatory framework for crowd-sourced equity funding, including simplified reporting and disclosure requirements, to provide small businesses with access to additional funding from innovative sources.
Business establishment costs
Small businesses will be able to immediately write off professional costs associated with starting up a company from the 2015/16 income year instead of over a five-year period. Business owners will be able to invest more money into the growth of their new business.
CGT relief reforms for small business
A new CGT relief measure will be available for small businesses that change their legal structures and do not necessarily involve incorporated entities from the 2016/17 income year. However, small businesses can only apply changes to the legal structure once.