The budget has a few sweeteners, but not so much that will turn anyone hyperactive. The welcome news is that the turnover threshold for classifying a “small business entity” will increase from $2 million to $10 million. This will allow a further 90,000 to 100,000 businesses to access a range of small business tax concessions, such as the $20,000 instant asset write-off, use of small business pools, and concessional PAYG instalments.
For incorporated small businesses, the 28.5% corporate tax rate from the 2015-16 Federal Budget has been reduced to 27.5%, with eligibility increased to this $10 million threshold. However, for unincorporated businesses, the eligibility turnover threshold will only increase from $2 million to $5 million for access to the small business tax discount. The offset will be gradually increased from 5% to 16% over the next 10 years but still capped at $1,000 per eligible individual.
Disappointingly however, the current $2 million threshold will be retained for access to the highly valuable small business CGT concessions. This undoubtedly creates an administrative headache, but be assured that we are here to help you manage this.
On the superannuation front, the government has performed a “Robin Hood” by reducing the concessions available to the wealthy in favour of providing incentives to parents and low income earners. This will be achieved by replacing the Low Income Super Contribution scheme with a Low Income Superannuation Tax Offset (more details to follow in another post), and measures to allow people who have missed work to raise children or through illness to make top-up payments when they return to work.