What could the 2016 Federal Budget hold for small business?
With just a number of hours until the 2016 Federal Budget announcement, we ponder what lays in store for small businesses and their finances…
Businesses who want to make the most of their finances will be eagerly watching the countdown to the 2016/2017 Federal Budget. All eyes are on Malcolm Turnbull and Treasurer Scott Morrison to see if the incumbents can deliver a sustainable budget before they go to election.
As the spine of the Australian economy, small businesses will likely see their fair share of change following the announcement, so it helps to prepare mentally for any changes - good or bad - by considering the possibilities.
What will the 2016 Budget hold for small to medium-sized enterprises (SMEs)? While nothing is certain, it is fun to speculate.
A change in company tax rate
"The government will cut company taxes by $1.5 billion over the next four years to provide incorporated small business with much needed tax relief," the 2015 budget unveiled. This was on the back of a bumper 2014, when the number of new-business registrations was the highest on record.
Similarly, the 2016 Budget could provide further company tax relief - although any change is likely to be modest as the government tries to reign in its spending.
In a February address to the National Press Club, published by Smart Company, Mr Morrison suggested that changes could put us in line with our trans-Tasman neighbours.
"We are looking to control new spending, it's a very similar model to what was employed by John Key in New Zealand and other places," he said. Assuming Mr Morrison was inferring to company tax rates, Australia's 28.5 to 30 per cent figure could take a small dip (though a substantial one for some SMEs) to New Zealand's 28 per cent rate.
No increase to GST
Something that was taken off the table completely by the treasurer was an increase to GST, which will come as good news to many.
"On balance, the prime minister and I and the cabinet decided that this was not a goer - that it was not go for launch. It was something that had to be put away," he told a Press Club audience. "So, this government will not be taking a GST increase to the next election."
What about today?
Many Australian SMEs were encouraged to spend in the 2015 Federal Budget, after new tax depreciation measures came into effect. Regardless of May 2016's budget announcement, those companies with an annual turnover of up to $2 million will still be able to make the most of instant tax deductions on their newly purchased assets (up to the price of $20,000) until June 2017.
With the July 2nd Federal Election looming, businesses may sense a pause in activity, as everyone holds their collective breath, awaiting news on how the nation will be led in the new Financial Year and by whom.
Whatever happens on May 3rd and July 2nd in fact, Classic Funding Group will be on hand to assist you with short term and/or long term cash flow solutions.
Give us a call on 1300780895 to discuss!
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