We left the response to the budget by IAS until August so that you can revisit it again now that you are finalising your household and business budgets for this financial year. We haven’t provided you a completed Budget Review (it’s a dry old subject), but you can find the winners and losers in the budget on the ABC Website.
Instead, here are just a few key positive outcomes that will affect some of you in the short term.
While each of these changes is subject to being passed into legislation, it’s worth being aware of how these changes may impact you in the coming financial year.
Small business tax rate to be reduced to 28.5% from 1 July 2015
A small business is defined as a business with an annual turnover of less than $2 million.)
Tax reduction for small unincorporated businesses from 1 July 2015
Small businesses operated by a sole trader or partnership will be entitled to a 5% discount on the tax they would otherwise pay, subject to a maximum discount of $1,000.
Our tip for these new savings would be to use the 1.5% of budgeted profit for small business and the 5% discount for unincorporated businesses and start to increase your superannuation contribution and, if you are up to the maximum on your concessional contribution (if incorporated), make sure you contribute under your non concessional. This is a great forced saving exercise and one that we use ourselves.
Immediate tax deduction for professional services from 1 July 2015
New business can now claim an immediate tax deduction for the costs of obtaining professional services associated with establishing the business.
This is great news for anyone who is contemplating setting up a new business or contracting out your services through an ABN. Costs for setting up the business include accountants and legal fees etc.
Capital gains tax relief from 1 July 2015
If a small business owner wishes to restructure their business, they will be eligible to access capital gains tax rollover relief.
Normally, when you start to restructure a business this could trigger a Capital Gains issue, this is the perfect time to speak to your accountant and get your business in order whilst you have an opportunity to gain rollover relief.
Accelerated depreciation from 12 May 2015
Any assets up to a value of $20,000 acquired by a business between 7.30pm on 12 May 2015 and 30 June 2017 will be eligible for a full tax deduction in the year of purchase.
We were excited (as much as you can get about a budget) about this particular new legislation. This helps us out enormously when we are purchasing new equipment for the office as it enables us to obtain a tax deduction on the purchase price up to $20,000 FOR EACH ITEM!!
Early release of superannuation benefits – from 1 July 2015
The Budget includes a proposal to extend the 12-month survival period to 24 months for people suffering from a terminal illness.
As insurance advisors we see this being of great help to the unfortunate sufferers who wish to use the superannuation proceeds to put their affairs in order or for holidays with loved ones.
Assets test free area from 1 January 2017
By increasing the assets test free area, an estimated 170,000 pensioners will receive a pension increase.
This is great news for those that have worked hard for all their life and now have something to look forward to in January 2017.
For more information or advice call us on (02) 8268 2900 for an obligation-free chat.
