Australia Legislates For SME Tax Cuts

by Mary Swire, Tax-News.com, Hong Kong

25 June 2015

The Australian Government has introduced legislation to implement a small business "tax discount" and a new deduction for start-up expenses. It will also reduce red tape within the fringe benefits tax (FBT) system.

The measures form part of the 2015 Budget's AUD5.5bn (USD4.25bn) Jobs and Small Business package. Under the reforms, unincorporated small businesses with an annual turnover of less than AUD2m will be able to claim a five percent tax discount on tax payable on business income. The discount will be capped at AUD1,000 per individual per year and delivered as a tax credit.

The legislation will also enable all new small businesses to immediately deduct certain expenses incurred in setting up a business, such as legal advice and registration fees. These expenses previously had to be depreciated over five years. Finally, the Government will exempt from FBT the portable electronic devices employers provide to their employees.

Legislation passed by the Senate last week will implement a 1.5 percent company tax cut for companies with a turnover of less than AUD2m and an immediate tax deduction for assets costing less than AUD20,000. Later this year, the Government will introduce legislation to enable small businesses to restructure without facing an immediate capital gains tax liability.

Treasurer Joe Hockey and Small Business Minister Bruce Billson said: "The Government is committed to ensuring Australia is the very best place to start and maintain a small business. Our Jobs and Small Business package is creating the right conditions for Australian businesses to thrive and grow."

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