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Federal Budget 2016 wrap up – Small business

INCREASING THE SMALL BUSINESS ENTITY TURNOVER THRESHOLD

The government will increase the small business entity turnover threshold from $2 million to $10 million from 1 July 2016. The current $2 million threshold will be retained for access to the small business CGT concessions. The eligibility threshold for the unincorporated small business tax discount will be raised to $5 million.

The government anticipates that an additional 90,000 to 100,000 businesses will be able to access the small business  concessions because of the increase in the threshold to $10 million. A selection of concessions available for small business and eligible thresholds is laid out in the table below.

INCREASING THE UNINCORPORATED SMALL BUSINESS TAX DISCOUNT

The government will increase the tax discount for unincorporated small businesses incrementally from the current 5% to 16% over 10 years.

This will coincide with staggered cuts in the corporate tax rate to 25%. The current cap of $1,000 per individual for each income year will be retained.

The discount is available to individual taxpayers with business income from an unincorporated small business entity. Currently the aggregated turnover threshold of the small business is $2 million. The government intends to increase this threshold to $5 million.

Summary: Selected small business concessions and eligible thresholds (from 1 July 2016)

Aggregated
annual
turnover
$20,000
instant asset
write-off
Small
business CGT
Company
tax rate
reduction
Discount for
unincorporated
entities
Small business
pool
Immediate deduction
for certain start-up
costs
< $2 mYesYesYesYesYesYes
< $5 mYesNoYesYesYesYes
< $10 mYesNoYesNoYesYes