The 2015-16 Federal Budget has delivered a tax break for
small businesses, money to promote trade and encouragement of foreign
investment.
Small business
Small business is a big winner in last night’s budget, with
Hockey announcing a $5.5 billion Jobs and Small Business Package aimed at
helping businesses invest, hire and grow.
96 percent of Australian businesses will benefit from the
package, which offers $5 billion in tax cuts for small businesses with annual
turnover below $2 million.
Small corporations will have their company tax rate cut to
28.5 per cent. Unincorporated small businesses will benefit from a 5 per cent
tax discount, up to $1,000 per year.
Starting Budget night and until the end of June 2017, the
Government will provide small businesses with an immediate deduction for all
individual assets costing less than $20,000. All small businesses will get an
immediate tax deduction for every asset they buy costing less than $20,000.
Currently, the threshold sits at $1,000. This $20,000 limit applies to each
individual item. Small businesses can apply this $20,000 rule to as many
individual items as they like.
Increasing the depreciation threshold will mean improved
cash flow for small businesses. Any assets over $20,000 can be added together
(‘pooled’) and depreciated at the same rate. These assets are depreciated at 15
percent in the first income year, and 30 percent per year thereafter. If the
value of the pool is below $20,000 until the end of June 2017 it can be
immediately deducted too.
The Government will reduce red tape in the Fringe Benefits
Tax (FBT) system by ensuring all small business work‑related
portable electronic devices are FBT free. Small businesses will also benefit
from a new Capital Gains Tax rollover relief when changing their legal
structures.
The Jobs and Small Business package also provides a helping
hand to small business start‑ups by streamlining the business
registration processes. Start-ups will also be allowed to immediately deduct
professional expenses incurred when they start a business. Removing obstacles
to crowd‑sourced equity funding will help promote small businesses
access to finance. This will complement expanded tax concessions for Employee
Share Schemes.
Trade
The Government will provide $18.0 million over four years
from 2015‑16 to Austrade to expand its current programme of
Australia Week events. The events will be held in China, India, ASEAN countries
and the United States to build Australia’s reputation as a tourism destination
and as a trade and investment partner. The Department of Foreign Affairs and
Trade, the Australian Trade Commission and Tourism Australia will redirect $8.8
million of existing funding over four years to support these events.
The Government will provide $24.6 million over two years
from 2015‑16 to promote business understanding of the recently
concluded Free Trade Agreements in North Asia and to assist businesses to
access and maximise their benefits under these agreements. Advocacy and
outreach activities will take place in both Australia and in target offshore
markets. Funding of $0.3 million will be met from within the existing resources
of the Department of Foreign Affairs and Trade.
Foreign investment
The Government will provide $30.0 million over four years to
attract major job creating investment in each of the Government’s five
investment priority areas: infrastructure; tourism; resources and energy;
agribusiness and food; and advanced manufacturing, services and technology.
This funding will establish five senior investment
specialists posted offshore, and a new investment promotion and attraction
office in Boston, United States of America. This funding will also provide for
investment attraction events, detailed market research and analysis to support
attracting investment, and provide additional staff dedicated to investment
promotion within Australia and overseas.
The Government is also increasing scrutiny and transparency
around foreign investment in agriculture, lowering screening thresholds for
agricultural land and agribusiness and implementing a comprehensive register of
foreign ownership in land.
The introduction of application fees on all foreign
investment applications will improve service delivery and ensure Australian
taxpayers are no longer funding the administration of the system.
The Government is consulting further on options to ensure
Australia has a modern, streamlined foreign investment system.
Multinational tax
The Government is going after multinationals that are not
paying their fair share of tax by shifting their profits overseas.
It will strengthen domestic laws to combat tax avoidance by
multinationals through:
- a Multinational Anti-Avoidance Law to ensure
that foreign businesses cannot escape the Australian tax net using contrived
arrangements; - closing the digital loophole to ensure that GST
is applied to digital products and services imported by consumers; - increasing penalties for tax avoidance by large
companies; and - Working with businesses on a code for the
disclosure of the tax affairs of companies operating in Australia.
For more information on the Federal Budget, click here.
Image: smh.com.au