Treasurer Joe Hockey has revealed his latest plan to kick-start the Australian economy in his budget speech to Parliament this week.
Small business was a big focus of this year’s budget, with the treasurer hoping to inject confidence into the sector, that for some time have been feeling less hopeful about the future of the Australian economy. Small businesses – many struggling under increased compliance costs – are always looking for new ways to make their accounting process easier.
There are estimated to be around 2 million small businesses in Australia that employ millions of workers.
“Our future growth will come from growing small business into big business,” said Mr Hockey.
What’s in the small business package?
The treasurer announced that from July 1 this year, the companies tax rate will be lowered from 30 per cent to 28 and a half per cent for those with annual turnover of less than $2 million. Other businesses will also be eligible for a 5 per cent tax discount worth $1,000.
According to the treasurer, 96 per cent of companies in Australia are classified as small business, making this an effective way to get tax relief to a significant number of companies.
Prime Minister Tony Abbott previously announced this initiative last month as one way the government would look to focus on small business in the budget this year.
The Business Council of Australia has also come out and said the budget was “without doubt a shot in the arm” for small businesses, providing them with much-needed room to keep growing.
While supportive of the measure, the Australian Chamber of Commerce and Industry (ACCI) said it would like more government help for small businesses in Australia that were not incorporated companies, like tradesmen.
Kate Carnell, CEO of the ACCI, said: “With more than seven in 10 Australian small businesses unincorporated, it was concerning that they would miss out on the benefit of the 1.5 percentage point cut in company tax for businesses with a turnover of less than $2 million”.
However, other measures announced in the budgets would wp-contently to these types of businesses. The treasurer has made it possible for business to claim an immediate tax deduction for all items they purchase up to $20,000.
The government was also abolishing fringe benefits tax on all portable electronic devices used for work.
“It is encouraging that the government is looking after those 1.7 million unincorporated small businesses, including tradies, sole operators and partnerships, with other support. Making it easier for small businesses to claim tax deductions for their expenses will make it easier for small businesses to invest,” said Ms Carnell.
