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2016-06-14 00:00:00Small Business TaxEnglishhttps://quickbooks.intuit.com/au/resources/au_qrc/uploads/2017/01/576800393-1464758729131.jpghttps://quickbooks.intuit.com/au/resources/small-business-tax/breaking-2016-federal-budget-changes-future-work/Breaking Down the 2016 Federal Budget: How it Changes the Future of Work

Breaking Down the 2016 Federal Budget: How it Changes the Future of Work

2 min read

The 2016 Federal Budget announced some helpful initiatives for small- and medium-sized enterprises (SMEs). We take a look at the key changes and how they affect small- and medium-sized businesses.

Another Tax Cut!

The small business tax rate has been bumped down again to 27.5%. And with the revenue threshold for whats classified as a small business jumping from $2 million to $10 million, roughly 870,000 business owners and 60,000 sole traders now qualify for this tax cut.

The threshold for access to the unincorporated small business tax discount has also been increased from $2 million to $5 million and the rate has increased to 8%. The government has also promised to decrease the tax rate on all companies to 25 per cent by 2026-27, although that remains to be seen.

Less Red Tape

Bentleys latest Voice of Australian Business Survey showed 64% of SMEs preferred simplification of compliance and reporting processes over tax cuts. Fortunately, the latest Budget delivered both. Heres how your bookkeeping has been made simpler:

  •        GST and BAS: Businesses can now report GST on a cash basis, and BAS reporting labels on activity statements will be reduced from seven to three. Effective from 1 July 2017, you’ll only have to include total sales and GST on sales and purchases.
  •        Asset depreciation: The simple immediate tax write-off for assets under $20,000 will continue, at least until 30 June 2017.
  •        Stocktake: Businesses with revenue under $2 million can avoid this chore altogether if their stock has not increased or decreased in value by more than $5000.
  •        PAYG: While theres no concrete proposal yet on the table, the ATO has committed to implementing new methods to calculate and pay instalments. This will assist SMEs to avoid over- or under-paying staff.
  •        Youth Job PaTH: This program is not confined to SMEs but the ability to trial interns without having to pay at least the minimum wage should make life easier for smaller businesses trying to scale up quickly. This will also allow businesses to suss out whether an intern has the right skillset to be a potential full-time addition to the company before hiring permanently from the start.

Streamlined Superannuation

The immediate good news is the super rate is staying the same (9.5%). The good news in the long run is that all businesses with less than 19 employees must be registered and compliant with SuperStream by June 30. (SuperStream is a suite of measures designed to make the back office operation of superannuation more efficient. Its believed this will promote consistent and timely employer super contributions). So why is that good news? The ATO estimates that businesses cut the time involved in meeting their super obligations by 70% after registering for SuperStream.

The latest budget continued the good work of last year by lowering tax and compliance costs for small businesses. While theres always more to be done, theres never been a more exciting time to be an Australian small businessperson. 

For more useful information about the 2016 budget and how it affects your company, visit our Small Business Centre today.

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Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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