The tax rate reductions for business and changes to the small business threshold were announced in the last Federal Budget but have been stuck in the Senate with concerns that it was merely a ‘sugar hit’ for the top end of town.
However, a last-minute deal between the government and Senator Nick Xenophon will see the Bill pass Parliament but exclude large businesses with a turnover of $50 million or more from any tax cuts or concessions.
The negotiated Bill enables:
- An increase to the aggregated turnover threshold to $10 million for access to small business tax concessions from 2016-17. This means that any businesses with a aggregated turnover of under $10 million can now access a raft of concessions previously only accessible to small businesses under $2 million. The main concession left out is access to the small business CGT concessions, which still requires the entity to pass a $2 million turnover test or a $6m net asset value test.
- Progressive reductions in the corporate tax rate for businesses with a turnover under $50 million. Businesses with an aggregated turnover of less than $10 million will benefit from a company tax reduction to 27.5% this financial year, and
- For unincorporated businesses such as sole traders, partnerships and trusts:
- An increase to the aggregated turnover threshold to $5 million (up from $2 million) for access to the small business income tax offset from 2016-17, and
- An increase to the unincorporated small business tax discount to 8% from 2016-17. The offset will be capped at $1,000.