The Federal Government has announced as part of its 2015 Federal Budget, a $5.5 billion package for business which is aimed to encourage entrepreneurship, growth and the creation of jobs. Small Business, being entities that that have an annual turnover of less than $2 million, make up 90 percent of incorporated business and have been the winners in the 2015 Budget. 

Helping Startups Grow

Deduction of startup costs: The budget proposes allowing an immediate deduction of certain capital costs, such as professional costs including legal and accounting fees, incurred when starting up a business. Currently legislation only allows businesses to depreciate professional costs over 5 years and the introduction of this proposal will assist startups in accessing professional advice. 

Crowd funding: The Government has committed $7.8 million to ASIC to develop and monitor a regulatory framework to facilitate the use of crowd-source equity funding. This is another step towards assisting Small Businesses to access the capital they need to grow by making crowd-source funding easier to access.

Tax Concessions for Small Businesses

Tax cuts: It is proposed that from 1 July 2015, the company tax rate for entities that qualify as Small Businesses will be reduced to 28.5%, which is a 1.5% tax cut. Additionally, unincorporated Small Business entities will be eligible for a further 5% tax offset capped at $1,000.

Accelerated Depreciation: Under the proposal, Small Businesses will be entitled to an immediate deduction for depreciating assets up to the value of $20,000.00. This will replace the previous instant asset write-off threshold of $1,000. Only a small number of assets will be excluded from the concession (such as horticultural plants and in-house software).

Restructuring Concessions: From 1 July 2016, it is proposed for Small Businesses to be able to restructure to a difference legal structure without incurring a CGT liability by accessing the CGT roll-over relief. Currently only businesses that restructure to become a company can access the CGT roll-over relief. This will provide startups with the flexibility to restructure their business to a different legal entity as they grow without adverse tax consequences.  

For more information contact:

Dan Simmonds
Principal
Harwood Andrews
T: 03 5226 8513
E: dsimmonds@harwoodandrews.com.au

Laura van Stekelenburg
Lawyer
Harwood Andrews
T: 03 5225 5205
E: lvanstekelenburg@harwoodandrews.com.au