Back on 3rd May we published an article about the desirability of some sort of investment allowance for small business and Tuesday’s Federal Budget delivered an allowance that commentators have described as “unprecedented in scale and generosity“. The dominance of small businesses at QVM makes this a significant scheme for our market.
Essentially, businesses with under $2m annual turnover can claim immediate tax deductions for as many business purchases they like as long as they are under $20,000 each. Previously the maximum immediate write off was $1,000 with the balance written off over subsequent years. Here are some of the detail points –
- the allowance applies on purchases made after budget night and before June 30th 2017.
- businesses must be actively trading to receive the concession – this has been taken to mean actively submitting Business Activity Statements so you will need an ABN.
- any asset involved in running a business is covered by the scheme. This might include a vehicle, equipment, tools, computers etc.
Other tax concessions for small business include a lowering of the tax rate for small businesses with turnover under $2m. The tax rate is lowered from 30% to 28.5%. Unincorporated businesses, such as sole traders, partnerships and trusts, will get a 5% tax discount up to $1000 per year.
The budget also included measures to make it easier for start-ups to get their businesses organised.
Unsure of the impact on your business? – we suggest you ask your accountant.