I have been saying for years that small business is the life blood of the Australian economy and finally the Government is agreeing by delivering some fantastic initiatives to support the sector in this year’s Federal Budget.
I’m sure that most of you that are in small/medium businesses will agree that it has been a tough and hard road for the past few years and in my opinion this year’s budget will encourage those of us that have worked hard, long and tirelessly that it’s our time for a win!
Business and consumer confidence is beginning to grow, interest rates are low – this is it folks, strap on your seat belts because we are in for a great ride!
The key standouts for me include:
The Government allocating $40 million over four years to enable small businesses to change the legal structure of their business without incurring a capital gains tax liability.
As many of my clients will attest, I’m a strong advocate of regularly reviewing a company business structure to ensure that it continues to be suitable for your current circumstances and provides both adequate asset protection and remains as tax efficient as possible.
I see far too many businesses operating out of the wrong business structures – in fact, 91% of businesses who consult with me prior to becoming a client are not operating in the most appropriate structure and are consequently paying significantly more tax than they need to be.
Now is the time for small businesses to do something about it!
After speculation that we would see significant changes to super tax concessions, this year’s Federal Budget has proved to be a winner for the SMSF sector!
It’s great to see that the Government kept to its pre-election promise of not making major changes to superannuation including preserving limited recourse borrowing arrangements (LRBAs) as rumours were certainly building that they would act on the Financial System Inquiry’s recommendation to ban borrowing in super.
However, I think we may have dodged a bullet on this one as I fully expect changes to be made as the next Federal election approaches.
Again, my recommendation is: don’t leave it too late – act now and make the most of the opportunities offered through having a Self-Managed Super Fund.
Instant write off of assets costing less than $20,000.
While this isn’t an extra deduction, just the bringing forward of your depreciation deduction, for those of you needing to buy new equipment this is a great result.
If you’re a restaurant owner needing new tables and chairs or a builder needing to buy new equipment, that’s an immediate deduction you can claim and another great win for small business.
Just don’t forget to include your asset purchases in your cash flow plan.
Reduction in company tax rate from 30% to 28.5%
So from 1 July 2015 if your business is structured as a company you will pay 1.5% less tax or $15 less tax for every $1,000 profit.
That’s more money for small businesses to re-invest back into their business to accelerate growth, to employ new people and ultimately to further stimulate the economy.
While this was an anticipated measure to encourage small business investment in difficult times, it’s still a really positive move.
It’s also interesting that the Government has retained the franking credit rate at 30% for all companies as this allows small business owners to maintain the higher level of tax advantages associated with franking dividends.
All in all, I think this is one of the most positive budgets from a small business perspective for many years. I guess my key message would be: act now and make the most of it while it lasts!