Our post-budget wrap up looked at many of the announcements affecting small business with the “Growing Jobs and Small Business” package announced by the government on budget night. You can read more about the small business concessions at business.gov.au.
Now the legislation that many small business owners will be glad to see in place has made it through Parliament.
The Tax Laws Amendment (Small Business Measures No. 3) Bill 2015 puts into effect some of the concessions for small business that were included in the last Federal Budget.
If you’re not sure how to take advantage of any of the concessions we suggest you get some advice so you don’t miss out. Of course, our client managers can give you the advice you need!
5% discount on tax payable by unincorporated ‘small’ businesses
Individual taxpayers with business income from an unincorporated business that has an aggregated annual turnover of less than $2 million will be eligible for a small business tax discount. The income may be income from sole trading activities, or taxable distributions of business income from partnerships and trusts.
The discount will be 5% of the income tax payable on the business income received from an unincorporated small business entity. The discount will be capped at $1,000 per individual for each income year and delivered as a non-refundable tax offset.
This measure will apply from the 2015‑16 income year, so if you’re currently running a small business, you will be able to get a 5% tax discount from this year.
Immediate deduction for professional expenses for start-ups
The new law allows taxpayers to immediately deduct a range of professional expenses associated with starting a new business, such as fees for professional, legal and accounting advice. The upfront deduction will also be available for costs incurred in accessing “crowd-sourced equity funding”.
Currently, these costs are only deductible over a five year period.
The immediate deduction is also available for payments of fees, taxes or charges relating to establishing a business to an Australian government agency. For example, this includes fees for incorporating a company. It also extends to payments made to state and local government agencies (not just federal agencies like ASIC).
This measure will apply from the 2015‑16 income year, so if you’re thinking of starting a small business this year (and it will turnover less than $2 million), you will get some immediate tax relief with upfront deductions for some start-up costs.
FBT changes for work‑related electronic devices
The FBT law has changed to expand the previous FBT exemption for work-related portable electronic devices (such as smartphones, laptops and tablets). A small business entity employer (that has an aggregated annual turnover of less than $2 million) can now access the exemption for more than one such device provided to an employee within the same FBT year, even where the devices have “substantially identical functions”.
Previously, the exemption was only available for one device per employee per year, unless the multiple devices provided did not have substantially identical functions. Employers that are not small businesses are still restricted to the one device limit.
According to the government, the change will remove confusion where there is a function overlap between different products (such as between a tablet and a laptop).
However, it is not too early to consider this change for business planning purposes. The extended FBT exemption should be taken into account not only for FBT-specific planning, but also for general management planning and budgeting in relation to staff benefits.