Not too many surprises in the "Live within our means" Budget, but there are definitely some perks for SMEs!
As anticipated, there was no increase to GST and the small business company tax rate will be reduced to 27.5 from July 1, with a further phased reduction in the following years.
A change that had been hinted at prior to the official budget announcement and one that has been widely praised since, is the increase of the Small Business annual turnover threshold to $10million, up from the current $2 million threshold.
From 1 July 2016, all businesses with an annual turnover of less than $10 million will have access to simplified depreciation rules, including immediate tax deductibility for asset purchases costing less than $20,000 until 30 June 2017. The accelerated depreciation for business assets is currently only available to small businesses turning over less than $2million, and the increased threshold will open the measure to over 90,000 businesses.
Classic Funding Group may be able to assist eligible small businesses to take advantage of this budget initiative, by providing finance solutions to purchase the required assets. A Secured Loan Agreement (also known as a Chattel Mortgage) enables the business to take ownership of the asset from the outset, thus qualifying for immediate depreciation, while enjoying the predictability of affordable monthly repayments.
Examples of assets that can be acquired and depreciated include:
- IT hardware - computers, printers, scanners, servers, POS systems
- Vehicles - cars, utes, vans, trucks
- Office furniture - desks, chairs, boardroom tables
- Clean energy assets - Solar PV, HRVAC, LED lighting
- Tools and machinery
- Plant and equipment
It is important to note that businesses are not restricted to immediately depreciating just a single $20,000 asset. There is no limit on the number of assets, so long as each asset costs less than $20,000.
A lower company tax rate, simplified trading stock rules and method of paying PAYG instalments calculated by the ATO were just some of the other measures announced as part of the 2016 Federal Budget. To see which measures might relate to you, have a look at the budget.gov.au website - http://www.budget.gov.au/#your-budget and we seek professional financial advice.
If you foresee business growth in the near future, and are considering finance options to support this growth, please give us a call to discuss your requirements - 1300780 895