Last night saw Joe Hockey deliver the 2015 Federal Budget with Small Business and Farming Tax savings on the agenda.
Starting from 7.30 pm last night (12th May 2015) small business with a turnover of less than $2 million annually can immediately deduct assets costing less than $20000. This increases the accelerated depreciation rules from the previous threshold of $1000.
In what Joe Hockey labeled as a 'game changer' for small business, these rules have been brought in to increase spending on infrastructure, which in turn will hopefully help to reduce the unemployment rate and grow the economy, both heavy focuses of this years budget.
With the downturn of the mining industry, it looks as though small business is what the government believes will be the driving force to grow our economy.
Another big plus for companies classified as small businesses is a 1.5% tax cut, meaning the tax rate will drop from 30% to 28.5%. A tax cut will also be extended to non-incorporated small business's such as sole traders and partnership, who will receive a 5% tax discount on the tax they pay on income from their business (capped at $1000 per year).
For farmers, along with the Small business tax breaks from 1 July 2016, they will be able to claim an immediate, total deduction for any spending on fencing and water infrastructure, the aim of which is to help encourage farmers improve there productivity and environmental management of the land through water conservation and cell farming.
These tax breaks, particularly the $20000 write off for small business are going to have immediate benefits as we begin tax planning for 2015, it will become a useful tool to make sure your business is tax effective.
If you want to take full advantage of our Tax planning service before 30 June, call the office and book an appointment
Other notable points to come out of last nights budget
- Backpackers to lose the $18000 tax-free threshold
- GST to be charged on digital services provided by foreign firms (the Netflix Tax)
- Claim down on multi-national corporate to avoid tax in Australia (the Google Tax)
- Simplified Childcare Subsidies, making working parents better off
- Tightening of the Age care pension assets test from $1.15 million to $823,000