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2015 Federal Budget: $20,000 Instant Deduction for Small Business

2015-May-Federal-BudgetThe Federal Budget released on 12 May 2015 announced a deduction of capital expenditure for assets up to $20,000 for Small Business Entities (SBE).

A SBE is an entity (company, trust, partnership or individual) that has an aggregate business turnover of less than $2 Million. Points to note regarding the instant deduction measure include:

  • Applies to assets purchased from 13 May 2015 to 30 June 2017;
  • The purchase price of any individual qualifying asset must be less than $20,000 (excluding GST);
  • Each eligible purchase may be expensed in the year of purchase;
  • Used or second hand assets are eligible provided they have been “newly acquired” by the eligible entity;
  • The deduction on motor vehicles will need to be apportioned based on business % used;
  • Assets exceeding $20,000 will need to be depreciated at a rate of 15% in the first year and 30% each following year;
  • Leased assets are ineligible for the deduction, legal ownership of the asset is required (e.g. hire purchase, equipment loan, chattel mortgage etc). Please contact our office if you require assistance in this regard.

OTHER Small Business MEASURES

  • The tax rate for companies with an aggregated annual turnover of less than $2 Million will be reduced by 1.5% (that is from 30% to 28.5%) from the 2015/16 income year.
  • A 5% tax discount for individual taxpayers with business income from an unincorporated business with an aggregated annual turnover of less than $2 Million will also be introduced from the 2015/16 income year.
  • Primary producers will be able to claim accelerated depreciation for water facilities, fodder storage and fencing from 1 July 2016.
  • The rules preventing small businesses from re-entering the simplified depreciation regime for five years after opting not to use it will also be temporarily suspended.
  • Start-ups will be able to claim an immediate deduction for professional expenses associated with starting a business from the 2015/16 income year.
  • Capital gains tax (CGT) relief will be available to small businesses for a CGT liability arising from the alteration of their legal structure from the 2016/17 income year.
  • The fringe benefits tax exemption for portable electronic devices used primarily for work purposes will be expanded from 1 April 2016.
  • Further changes will be made to the taxation of employee share schemes.

PLEASE Note: the above measures still need to pass through Senate and receive Royal Ascent prior to having legislative effect.