Article by Jackie Brian, Acting Country Manager for Intuit Australia.
The proposed 2016 Federal Budget contains many initiatives that will help small businesses compete and thrive, including lower tax rates for companies and sole traders and simplified compliance requirements as part of the government’s ’10 Year Enterprise Tax Plan’.
At Intuit, we place a great deal of importance on understanding the environment in which our small business, accounting and bookkeeper partners operate. Deep understanding enables us to be your champion and build even better products to meet your needs.
So tonight I had the honour to to sit in the House of Representatives chamber in Canberra and hear Treasurer Scott Morrison deliver his first budget. With a number of initiatives revealed which will have a positive and meaningful impact on small businesses and start-ups, there was some fist pumping with some of my neighbours. Following is a breakdown of the key proposals.
Company Tax Rate Cuts
Businesses with revenue under $2 million have been enjoying a reduced tax rate of 28.5% since last year. From 1 July 2016, businesses with revenue up to $10 million will enjoy a further tax reduction to 27.5%. And there are further cuts to company tax to follow over time.
Tax Discounts for Sole Traders
Unincorporated businesses, including sole traders and partnerships, will have their tax discount increased from 5 percent to 8 percent in 2016–17. The revenue threshold for applicable businesses will also rise from $2 million to $5 million. This discount is capped at a maximum of $1,000 per year and begins 1 July 2016. There are planned increases for the discount (up to 16 percent) from 2024 to 2026 as well.
Asset Write-off Scheme Extended
The $20,000 instant asset write-off scheme will be extended until 30 June 2017 to businesses turning over up to $10 million annually (up from $2 million starting 1 July 2016). This allows businesses to immediately deduct the full value of every asset purchased to the value of $20,000, instead of claiming the deductions over a number of years. This should enable more businesses to invest in equipment and tools to help take the next step in their growth.
Superannuation Tax Deductions for Sole Traders
All individuals will be eligible for a tax deduction for the personal superannuation contributions they make. Previously, only self-employed individuals who had salary wages of less than 10% of their incomes could make these deductions, but now there is more flexibility for self-employed individuals to make the choice that is right for them and receive a tax deduction, up to a cap of $25,000 per year.
Simpler BAS reporting is set to become the standard for all SMBs with revenue up to $10 million beginning 1 July 2017.
We know that SMBs spend hours each month tracking and reporting GST, including preparing their BAS, and by simplifying their BAS this delivers SMBs time savings that they can better spend growing their business.
We look forward to seeing the GST categories simplified from seven labels, to just three – GST on sales, GST on purchases and Total Sales. ATO will be testing these new GST reporting standards in partnership with software providers beginning 1 July 2016.
This is a great example of the type of initiative that government can take in close partnership with cloud providers, accountants and bookkeepers, and industry advocates to make reporting and compliance more efficient for small businesses, so you can spend more time focused on growing your business and delighting your customers.
Investment in Startups and Innovation
Treasurer Morrison also announced a set of proposals focused on entrepreneurs and innovation.
One of the proposals announced an additional $89 million for the New Enterprise Incentive Scheme to provide training and networks to young entrepreneurs to begin building the next great businesses.
Additionally, the Youth Jobs PaTH plan was announced and can provide opportunities for Australian small businesses to bring young people into companies on an internship basis to see if they may be a good fit to help the business grow.
As Treasurer Morrison mentioned, the government also continues to implement initiatives that came out of the National Innovation and Science Agenda, originally delivered in December 2015 that focused on initiatives like crowdsourcing, reducing the fear of failure for startups through a proposed change in bankruptcy laws, and increased investment in accelerators and incubators. These proposals have also been welcome news for entrepreneurs as they look to start and grow their businesses.
Net, net SMBs will be big winners when the final version of this budget is passed. With the tax changes proposed and the additional simplification of compliance requirements, Australian small businesses will be able to compete more vigorously on a global scale and deliver more jobs to Australians.
I am constantly inspired by the passion, creativity and tireless energy of Australian SMBs and entrepreneurs and am encouraged to see the Government’s continued strong support for our talented and innovative local startups and small businesses.
For more information on the budget initiatives, visit http://www.budget.gov.au/.
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.