This year's Federal Budget includes some good news for small business enterprises (SBEs), including the continuation of the Enterprise Tax Plan and the digitisation of licensing and registration services.
These changes are made even sweeter by the fact that now even more businesses can qualify for SBE benefits. When it comes to running a business, sometimes it's good to be small. But many directors don't understand what actually constitutes a small business – do you know what you are?
Why it's good to be a SBE
3.2 million businesses – and the 6.7 million workers they employ – are celebrating being considered a SBE. That's because they'll be able to take advantage of several exclusive tax concessions.
According to the Australian Taxation Office (ATO), a SBE is any "sole trader, partnership, company or trust that operates a business for all or part of the income year, and has an aggregated turnover less than $10 million."
Here's just some of the positive news for these entities:
- A lowered company tax rate of 27.5 per cent – the lowest in 50 years
- The continued ability to write off assets up to $20,000
- Increased unincorporated tax discount rate
- More straightforward trading stock rules
- Simplified PAYG payment arrangements
- Deductions for some prepaid business expenses
Fostering growth in Australia's various SBEs was one of the government's top priorities this budget. In addition to concessions and benefits like these, the government also plans to pump money into various jobs initiatives and tighten up on multinational companies. Certain sectors, including manufacturing and tourism, also received stimulus packages.
Some of the ways SBEs will benefit
Lowered corporate tax rates are clearly beneficial to small businesses, but not all changes are so straightforward. If you want to make sure your enterprise can reap all the benefits of the new budget, it's essential to work with the right advisors.
After it was so well received, the government has also extended the immediate deductibility of asset purchases less than $20,000. Because deductions are immediate, your business won't have to suffer cash flow gaps as a result of investing in themselves.
The government has also offered large incentives to state governments to implement digitised, more efficient business registration practices. Why is less more when it comes to red tape? Because simplified registration means businesses can get to work faster and not have to wait for slow, pen and paper registrations and licenses to be approved.
At XO Accounting our focus is on enabling you, your family and your business to reach your full financial potential through user- friendly technology and professional advice. Don't miss out! Reach out to our small business tax consultants today.