The 2015-16 Federal Budget has delivered a tax break for small businesses, money to promote trade and will encourage foreign investment.
Small business is a big winner in last night’s budget, with Hockey announcing a $5.5 billion Jobs and Small Business Package aimed at helping businesses invest, hire and grow.
96 percent of Australian businesses will benefit from the package, which offers $5 billion in tax cuts for small businesses with annual turnover below $2 million.
Small corporations will have their company tax rate cut to 28.5 per cent. Unincorporated small businesses will benefit from a 5 per cent tax discount, up to $1,000 per year.
Starting Budget night and until the end of June 2017, the Government will provide small businesses with an immediate deduction for all individual assets costing less than $20,000. All small businesses will get an immediate tax deduction for every asset they buy costing less than $20,000. Currently, the threshold sits at $1,000. This $20,000 limit applies to each individual item. Small businesses can apply this $20,000 rule to as many individual items as they like.
Increasing the depreciation threshold will mean improved cash flow for small businesses. Any assets over $20,000 can be added together (‘pooled’) and depreciated at the same rate. These assets are depreciated at 15 percent in the first income year, and 30 percent per year thereafter. If the value of the pool is below $20,000 until the end of June 2017 it can be immediately deducted too.
The Government will reduce red tape in the Fringe Benefits Tax (FBT) system by ensuring all small business work‑related portable electronic devices are FBT free. Small businesses will also benefit from a new Capital Gains Tax rollover relief when changing their legal structures.
The Jobs and Small Business package also provides a helping hand to small business start‑ups by streamlining the business registration processes. Start-ups will also be allowed to immediately deduct professional expenses incurred when they start a business. Removing obstacles to crowd‑sourced equity funding will help promote small businesses access to finance. This will complement expanded tax concessions for Employee Share Schemes.
The Government will provide $18.0 million over four years from 2015‑16 to Austrade to expand its current programme of Australia Week events. The events will be held in China, India, ASEAN countries and the United States to build Australia's reputation as a tourism destination and as a trade and investment partner. The Department of Foreign Affairs and Trade, the Australian Trade Commission and Tourism Australia will redirect $8.8 million of existing funding over four years to support these events.
The Government will provide $24.6 million over two years from 2015‑16 to promote business understanding of the recently concluded Free Trade Agreements in North Asia and to assist businesses to access and maximise their benefits under these agreements. Advocacy and outreach activities will take place in both Australia and in target offshore markets. Funding of $0.3 million will be met from within the existing resources of the Department of Foreign Affairs and Trade.
The Government will provide $30.0 million over four years to attract major job creating investment in each of the Government's five investment priority areas: infrastructure; tourism; resources and energy; agribusiness and food; and advanced manufacturing, services and technology.
This funding will establish five senior investment specialists posted offshore, and a new investment promotion and attraction office in Boston, United States of America. This funding will also provide for investment attraction events, detailed market research and analysis to support attracting investment, and provide additional staff dedicated to investment promotion within Australia and overseas.
The Government is also increasing scrutiny and transparency around foreign investment in agriculture, lowering screening thresholds for agricultural land and agribusiness and implementing a comprehensive register of foreign ownership in land.
The introduction of application fees on all foreign investment applications will improve service delivery and ensure Australian taxpayers are no longer funding the administration of the system.
The Government is consulting further on options to ensure Australia has a modern, streamlined foreign investment system.
The Government says it will save $16 million over three years following the withdrawal by Cadbury of its grant application regarding the upgrade of its chocolate factory in Claremont, Tasmania. The savings from this measure will be redirected to fund other priorities in Tasmania.
The Government is going after multinationals that are not paying their fair share of tax by shifting their profits overseas.
It will strengthen domestic laws to combat tax avoidance by multinationals through:
- a Multinational Anti-Avoidance Law to ensure that foreign businesses cannot escape the Australian tax net using contrived arrangements;
- closing the digital loophole to ensure that GST is applied to digital products and services imported by consumers;
- increasing penalties for tax avoidance by large companies; and
- Working with businesses on a code for the disclosure of the tax affairs of companies operating in Australia.
Australian profits shifted overseas
The Government will provide $550.2 million over four years from 2015‑16 to maintain funding for quarantine and border protection activities on an ongoing basis. The funding comprises $274.7 million for the Department of Agriculture and $275.6 million for the Department of Immigration and Border Protection. Funding for this measure has already been provided for by the Government.
The Government will expand its current border surveillance and intelligence activities and increase the audits and assessments of offshore biosecurity systems to better manage risks associated with the increasing complexity of international supply chains and higher volumes of goods being imported to Australia. The expansion of activities will minimise the likelihood of incursions of exotic pests and diseases inside Australia's borders.
Expanded border activities will include: increased surveillance of air and sea cargo terminals; trapping and enhanced testing to monitor for animal and plant species of biosecurity significance; and implementation of a nationally consistent biosecurity intelligence system. Increased offshore risk management activities will include assessing and auditing the supply chain, focusing on verification of overseas governments' systems of biosecurity certification.
Cutting the National Food Plan
The Government will save $30.9 million over four years from uncommitted funding from the former Government's National Food Plan initiatives. Savings for this measure have already been provided for by the Government and savings will fund initiatives associated with the Agricultural Competitiveness White Paper.
For more information on the Federal Budget, click here.
All infographics were sourced from budget.gov.au.