Since the federal government’s 2016 budget aims to stimulate jobs and economic growth, there are a few new initiatives that will help small business owners save more money, incentivise them investing in their organisation and encourage angel investment from investors. Here’s a look at how your business will benefit from these changes.
From June 1, some 870,000 businesses will get a 1% tax cut, from 28.5% to 27.5%, while the annual turnover threshold will increase from $2 million to $10 million. At the same time, sole traders will get a 2.5% cut in the tax rate. Furthermore, the instant write-off on equipment purchases valued at $20,000 each – due to end June 30 2017 – will be expanded to include businesses with a turnover of less than $10 million, up from $2 million previously.
This year’s budget incentivises small business owners to save and reinvest in their company so you’ll have more money left over at the end of the financial year to spend on growing and developing your business.
Hiring Young People
The 2016 budget is encouraging small businesses to take on young job seekers through an internship program. Companies taking on interns for a period of 4–12 weeks where the job seeker works 15–25 hours per week will receive an upfront payment of $1000 plus the chance to evaluate whether the employee will add to your business for a longer, more permanent term.
This allows businesses access to a broader workforce, while reducing the risk of hiring incorrectly.
Investment Made Easy
Investors’ lives just became a little easier, particularly when it comes to investing in innovative startups. The new budget includes a 20% non-refundable tax offset on investment capped at $200,000 per investor, per year and a 10-year capital gains tax exemption for investments held for three years.
The Government wants investors to give promising startups the capital they need to hire more employees and grow quickly, so small businesses are eligible for investment tax incentivise if they:
- Are incorporated during the last three income years
- Aren’t listed on the stock exchange
- Have expenditure and income of less than $1 million and $200,000 in the previous income year respectively.
With so many initiatives giving you tax concessions and making capital investment more attractive, it’s a great time to be running your own business, and QuickBooks Online can help make things easier at the end of the financial year. Visit our blog for more useful information on how to manage your company’s taxes.