Reduced tax rate and Small Business turnover increased
Small business is the big winner from the 2016-17 Federal Budget.
The government will move towards reducing the company tax rate to 25% over 10 years. From 1 July 2016 the tax rate for small company business will be cut to 27.5% to which this tax rate will be available to small company businesses with annual aggregated turnover of $10 million.
The turnover over threshold will increase progressively to ultimately have all companies eligible for the 27.5% tax rate by 2023/24 for all companies with annual aggregated turnover less than $1 billion. In the 2024/25 income year the company tax rate will be reduced to 27% and then further be reduced by 1% in the 2025/26 & 2026/27 years until reaching 25%.
Effective from 1 July 2016 the small business entity turnover threshold will increase from $2 million to $10 million which will allow for business with annual aggregated turnover of less than $10 million to access certain small business concessions such as:
- The lower 27.5% corporate tax rate.
- Simplified depreciation including the ability to claim an immediate deduction for an asset purchased costing less than $20,000 until 30 June 2017.
- The option to account for GST on a cash basis.
However, the existing $2 million turning threshold will be retained for accessing the small business capital gains tax concessions.