Top 2 budget highlights saving Small Business Money this Financial Year

The Federal Budget announcement last night provides some further opportunities for your benefit.  If your business turns over less than $2m, read on for the Top2 budget highlights that can save your Small Business money this financial year.

  1. Purchase as many assets before 30 June under $20,000 for a full deduction this financial year

Businesses with a turnover of under $2m can now immediately deduct assets they start to use, or install ready for use provided the asset, or assets (as there is no limit on the number of items your business can buy) cost up to $20,000.

The message is clear on this one – get out and start spending!

Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed in the small business simplified depreciation pool (the pool) and depreciated at 15% in the first income year and 30% each income year thereafter.  The pool can also be immediately deducted if the balance is less than $20,000 over this period (including existing pools).

What can you buy?

Cars, vans, utes, trailers, motorbikes, lawnmowers, ovens, fridges, coffee machines, other machinery, kitchens, tables and chairs, carpets, printers, photocopiers, tools, welding equipment, saws, generators, pumps, solar panels, heating, hot water units, water tanks, air-conditioning units, sound and security systems, computers – any item used for running the business – will be 100% tax deductible when purchase price is under $20,000.  You cannot use the concession to buy stock for your business.  In-house software does not qualify.

  1. Minimise your income prior to 30 June 2015, maximise your income in the 2016 financial year

The Government has announced tax reductions for small businesses with an annual turnover below $2m regardless of entity type.

For companies, the company tax rate will be reduced by 1.5% to 28.5% from 1 July 2015. Maximum franking credit rates for a distribution will remain unchanged at 30%.

For taxpayers operating through an unincorporated business structure (partnerships, trusts, etc.), a 5% tax discount on the income tax payable on business income received will be provided.  The discount is capped at $1,000 per individual for each income year, and delivered as a tax offset.

It’s important to remember that you need to make a profit to benefit from these changes.

What this means for you

With changes taking effect from 1 July 2015, this may be a great opportunity to defer as much income as possible to July 2015. Of course, this depends on your individual circumstances, so best to Contact us to discuss your options.