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A Billnhas been introduced in Parliament which proposes to:
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• increasenthe small business entity turnover to $10 million from 1 July 2016;
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• increasenthe unincorporated small business tax discount from 5{256a07afe6cf75b7e23500f37551d0affdf8bab65b8226b57f0b6b9aa6c8fc70} to 16{256a07afe6cf75b7e23500f37551d0affdf8bab65b8226b57f0b6b9aa6c8fc70} over a 10-yearnperiod;
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• increasenthe turnover threshold to qualify for the lower company tax rate; and
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• lowernthe company tax rate on a schedule over 11 income years, reaching anunified company tax rate of 25{256a07afe6cf75b7e23500f37551d0affdf8bab65b8226b57f0b6b9aa6c8fc70} in the 2026–2027 income year.
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Smallnbusiness entities with aggregated turnover of less than $10 million would benable to access a number of small business tax concessions, including, amongnothers, immediate deductibility of small business start-up expenses, simplerndepreciation rules and simplified trading stock rules.
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TIP:nThe $2 million threshold for the purposes of the small business capital gainsntax concessions will be retained.
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Thentax discount for unincorporated small businesses – introduced in the 2015–2016nincome year – entitles individuals who are small business entities, or who arenliable to pay income tax on a share of the income of a small business entity,nto a tax offset equal to 5{256a07afe6cf75b7e23500f37551d0affdf8bab65b8226b57f0b6b9aa6c8fc70} of their basic income tax liability that relates tontheir total net small business income. This offset is capped at $1,000.nAlthough the proposed increases in the offset would increase the amount ofnoffset an eligible individual may claim, the offset would remain capped atn$1,000.
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TIP:nWith a difficult Senate, the Coalition Government may make further changes innorder to pass its Bill.
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Important: Clients should not act solely on the basis of the material contained in Update. Items herein are general comments only and do not constitute or convey advice per se. Also, changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. This update is issued as a helpful guide to clients and for their private information.