Federal budget 2014 – 2015
Incredibly the budget introduced an immediate tax deduction for the purchase assets costing less than $20,000 for small business entities (SBEs) from 12 May 2015 to 30 June 2017. From 1 July 2017 the immediate tax deduction will revert back to $1,000 for small business entities. The write off also extends to allow the write off of any small business entity pool where the balance is less than $20,000 through to the end of 30 June 2017.
Small business tax reductions
The budget also included a reduction in the company rate of tax from 30% to 28.5% for SBEs. The change also allow the continutation of dividends to be franked at the 30% to pass on the tax saving to individuals (limited to the extent that tax was previously paid at the higher rate). Further the budget addressed tax cuts for non-incorporated SBEs (sole traders, partnerships and trusts – most business owers in Australian aren’t incorporated) with the SBE tax offset. This measure reduces the tax paid on SBE income by 5% but is capped at $1,000 per year.
Given the SBEs tax concessions outlined above, the budget addressed the capital gains tax consequences for SBEs changing structure (e.g. changing from trading through a company to a trust) by allowing capital gains roll over relief from changing to and from any entity type. Previously there was only capital gain tax roll over relief for rolling into a company.
Start up concessions
To further encourage entrepreneurship the budget allowed an immediate tax deduction for the costs of professional advisor expenses (accountant and solicitor fees) associated with establishing a new business.
Finally in the FBT realm of the budget, all work related portable electronic devices were exempted from FBT. Previously only one device was FBT exempt per employee per year. The salary packaging of meal entertainment benefits (junket) for employees of not for profit entities has been capped at a grossed up value of $5,000.
There were other business (but not specifically tax related) measures rolled out in the budget that I’ll address in future updates.