Small Business Tax Breaks To Help Your Business – 2017-18 Budget
There are (still proposed) small business tax breaks to help your business soon to be finalised. From the ATO website, here are details of proposed changes to tax and superannuation legislation and policy, and how the ATO proposes to administer the changes. From the ATO website –
Budget 2017–18
The Government handed down the 2017–18 Budget on 9 May 2017, with several proposed changes to tax and superannuation laws. Below is a list of the announced measures. You can access the Budget papers here: budget.gov.au
The Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016External Link has been passed by both houses, but is not yet law. The proposed Bill will do the following:
In the 2016–17 Budget, the Government announced that it intended to progressively reduce the corporate tax rate from 30 per cent to 25 per cent. These changes were outlined in the Enterprise Tax Plan 2016 Bill. Amendments were made to this Bill by the Senate on 31 March 2017. The amendments were accepted by the Government and received Royal Assent on 19 May 2017.
Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017 was introduced to the House of Representatives on 11 May 2017 to increase the scope of which corporate entities would be eligible for the lower corporate tax rate in future years.
The corporate tax rate is reduced from 28.5% to 27.5% for the 2016–17 income year for small business entities. The aggregated turnover threshold to qualify as a small business has been increased from $2 million to $10 million.
In 2017–18 the threshold increases from $10 million to $25 million and in 2018–19 to $50 million. From 2017–18, corporate entities eligible for the lower tax rate will be known as base rate entities, i.e. the small business definition will remain at $10 million from 2017–18 onwards while the base rate entity threshold will continue to rise. Click for more info.
- Increase the small business turnover threshold, giving more businesses access to small business concessions.
In the 2016-17 Budget, the Government announced an increase to the small business entity turnover threshold from $2 million to $10 million. From 1 July 2016, business with a turnover of less than $10 million will be able to access a range of concessions which are currently only available to business entities with a turnover of less than $2 million.
The current $2 million turnover threshold will be retained for access to the small business capital gains tax concessions.
Access to the unincorporated small business tax discount will be limited to entities with turnover less than $5 million.
We will accept tax returns as lodged during the period up until the outcome of the proposed amendment is known. Once the outcome of the proposed amendment is known taxpayers will need to review their positions back to their 2016-17 income year.
For what to do if the law is enacted or if it is not, click here
In the 2016–17 Budget, the Government announced an increase to the tax discount for unincorporated small businesses incrementally over 10 years from 5 per cent to 16 per cent.
From 1 July 2016, the tax discount will increase to 8 per cent, remain constant at 8 per cent for eight years, then increase to 10 per cent in 2024–25, 13 per cent in 2025–26 and reach a new permanent discount of 16 per cent in 2026–27.
The increases will coincide with staggered cuts in the corporate tax rate for certain entities to 25 per cent. The current cap of $1,000 per individual for each income year will be retained.
The tax discount applies to the income tax payable on the business income received from an unincorporated small business entity. The discount is provided by way of a small business income tax offset which you claim in your individual tax return.
From 1 July 2016, the discount will be extended to individual taxpayers with business income from an unincorporated business that has an aggregated annual turnover of less than $5 million.
Administrative treatment
The ATO will accept all tax returns as lodged during the period up until the law change is passed by Parliament.
What to do if the law is passed or not, click here.
For a list of all the Measures, click here.
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