Treasurer Scott Morrison has announced the details of his and Prime Minister Malcolm Turnbull’s first budget, which they had indicated would be “fair” and focused on “jobs and growth”, by reducing the tax burden on small business; hoping that this will allow these businesses to further invest in their future - and Australia’s.
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Local small businesses are the big winners, with a reduction in the company tax rate from 28.5 per cent to 27.5 per cent in the 2016/17 year. The government has expanded its definition of what is a small business, so that more businesses can access this tax cut.
Previously it was a business with an annual turnover of less than $2 million. From 1 July 2016, a small business will be one with an annual turnover of less than $10 million.
According to the Government, this change will allow an additional 870,000 businesses to access the company tax rate reduction, and many more small business concessions, such as the immediate tax write-off of capital costs of up to $20,000, pooled depreciation rules and tax relief on restructuring their business.
This tax cut will also extend to business that are not companies, such as partnerships, trusts and sole traders, by extending the unincorporated tax discount to those businesses with a turnover of less than $5 million.
Eventually, all companies will benefit from a reduction in the company tax rate to 25 per cent over the next 10 years.
To help pay for this tax cut, the Government is to introduce a “Google tax” on multinationals corporations, to ensure they pay their share of tax in Australia, rather than shifting their profits offshore to low-tax countries such as Singapore or Hong Kong.
The wealthy will also help to pay for this with a reduction in the concessional tax treatment their superannuation receives.
Local schools will hopefully share in the additional $1.2 billion in extra funding over three years commencing from 2018.
Locally, the proposed inland rail project between Brisbane and Melbourne should provide more jobs and work for local businesses, in a similar way that the Hume Highway upgrades did.
Individuals earning more than $80,000 per annum will benefit from a small tax cut – about $6 per week. However, for smokers there are planned increases to the tobacco tax.
Overall, not your typical pre-election cash splash budget, but it will be the outcome of the next election that gives the final score on what the electorate really think of this Budget.
