On 12 May 2015 the Treasurer handed down the Federal Government’s 2015/2016 Budget.
The following is a snapshot of the Budget initiatives.
Jobs and Small Business Package
The Budget announces a $5.5 billion Jobs and Small Business package, including $5 billion in tax relief for small businesses with an annual turnover of less than $2 million.
As part of the package:
- Small corporations will have their company tax rate reduced to 28.5 percent;
- Unincorporated small businesses will receive a 5 percent tax discount, up to $1,000 per year;
- All small businesses will also be able to obtain an immediate tax deduction for a wide range of assets purchased and used or installed and ready for use by 30 June 2017 that cost less than $20,000;
- The Government will reduce red tape in the Fringe Benefits Tax (FBT) system by “ensuring that all small business work-related electronic devices are FBT free”;
- Small business will benefit from a new Capital Gains Tax (CGT) rollover relief when changing their legal structures;
- Streamlining of business registration processes will reportedly make it easier to start a small business;
- Start-ups will be eligible for immediate deductions for professional expenses incurred when starting a new business;
- Removing obstacles to crowd-sourced equity funding will help promote small businesses access to finance.
The Budget announces a $4.4 billion Families Package “to give parents more choice and opportunity to work”.
Child Care reforms will “make the system simpler, more affordable, accessible and flexible – supporting workforce participation and providing quality early learning”.
- The Government will invest an additional $3.5 billion over 5 years on child care assistance, including a new Child Care Subsidy;
- A simplified Child Care Subsidy is proposed for implementation from 1 July 2017, with a single subsidy based on family income
- Families earning around $65,000 or less will receive a subsidy of 85% of child care fees (up to an hourly fee cap). There will be no annual cap for families earning around $185,000 or less;
- The eligibility for the Child Care Subsidy will be determined by an activity test;
- The Government will also spend $869 million on the Child Care Safety Net to assist vulnerable, disadvantaged and additional needs children.
The Budget proposes a range of other measures including:
- Extension of GST to digital products and services imported by consumers from 1 July 2017;
- Removal of the tax free threshold for people on working holidays;
- Changes to work related deductions for car expenses (with 12% of original value and one third of actual cost measures removed and simplification of the cents per kilometre method);
- Proposed changes to Employee Share Schemes from 1 July 2015;
- Increase to the Medicare Levy Low-Income Thresholds;
- Capping of salary sacrificed meal entertainment and entertainment facility leasing expenses to a grossed-up cap of $5,000 from 1 April 2016;
- Extension to the release of superannuation for people with terminal medical conditions;
- Primary producers will be able to immediately deduct capital expenditure on fencing and water facilities.