4 ways entrepreneurs and small businesses are budget winners

With another federal budget handed down recently, we’ve hand-picked four items that will most likely affect how much tax your business will pay. Please note these items have not been passed through the senate and are only proposed changes at the date this article was published.

  1. Faster depreciation for small businesses being businesses with turnover of less than $2 million. From 7:30pm on 12 May 2015 (when the budget was announced) and 30 June 2017, you’ll immediately be able to write off any asset that cost $20,000 or less (A far cry from the current $1,000 cap). This includes any motor vehicles or plant and equipment.
  2. A 1.5% tax cut to small businesses. If you’re a small business owner, your company’s tax rate in the 2015/16 financial year will be reduced from 30% to 28.5%. Dividends will still be franked at 30% and there is also a 5% tax discount up to $1,000 for non-incorporated tax payer!
  3. Immediate deduction of professional expenses. Entrepreneurs will be able to write off the expenses you incurred starting their new business immediately, instead of over a five-year period.
  4. Car expense claims. If you use the ‘cents per kilometre’ method to claim your business’ car expenses as a tax deduction, you’ll no longer have to choose which rate to use. In the 2015/16 financial year there will be one rate for all vehicles—66 cents per kilometre. The log book method of claiming car expenses will still be available however the 12 percent of cost of car and the one third of operating cost methods of calculating car expense claims have been removed.

These are just some of the changes that could affect you in the latest budget. If you’d like to know more about how you could save on your tax, get in touch with us on (02) 4908 0400.