Again the recent Federal Budget provides some key initiatives to address, however given the current political environment and the upcoming election some uncertainty exists as to the passage of the proposed changes and their legislative framework. To this end we can take some certainty that whichever government is elected in July, they will be looking to make changes to superannuation, direct and indirect taxes. Again, rather than provide an in depth commentary of the budget, we have identified the initiatives and have flagged relevant areas to mention. Should you like a more detailed review of the budget initiatives, please click to see our budget review paper and related commentary.
Tax for Small Business
- Tax rates coming down again from 28.5% to 27.5% from 1 July 2016 for Small Business (still 30% if you are not “Small” but planned reductions in the next 10 years?)
- Change in the definition of “Small Business” as the turnover threshold will increase from $2m to $10m in July 2016.
Superannuation
Many changes on this front around how much and how you can go about putting money in Super and maximum super balances. The changes kick in from 1 July 2017 so our recommendation is to focus on what can be done right now around Super. Given the current political landscape 1 July 2017 is a little too far away to be planning. So for this year, if you are under 50 years of age you can max out your super contributions to $30,000 for the year and over 50’s to $35,000.
Small Business Restructure (special bonus item)
This was not included in the budget however in March this year a law was passed that will allow you to restructure your business without attracting CGT. This comes into play from 1 July 2016. This coupled with the change in definition of a “small business” means there are potentially some really good things we can do for anyone who is looking to re-structure.