Treasurer Scott Morrison has delivered the 2016 Federal Budget, announcing several sweeteners for SMEs and middle-income earners.
The Government will reduce the company tax rate for small business from 28.5% to 27.5% – in addition to increasing the turnover threshold for small business able to access this rate from the current $2 million to $10 million.
“This means businesses with a turnover of less than $10 million will also be able to access immediate tax deductibility for asset purchases costing less than $20,000 until 30 June 2017,” Treasurer Morrison said in a statement.
“This will see 870,000 businesses, employing 3.4 million Australians, have their tax rate reduced.”
In addition, the Government will extend the unincorporated tax discount to businesses with an annual turnover of less than $5 million and will increase the discount to 8% capped at $1,000.
“Around 2.3 million businesses will potentially have access to this tax discount,” Morrison said.
The Small Business Minister, Kelly O'Dwyer, highlights small businesses will also benefit from changes to simplify BAS reporting requirements.
“From 1 July 2017, all small businesses with less than $10 million turnover will be able to easily classify transactions, and prepare and lodge their BAS. This simpler approach means that small businesses can work with their tax professionals on growing their business not form filling. A trial of the new simpler reporting arrangements will commence on 1 July 2016.”
For individuals, the upper limit for the middle income tax bracket will increase from $80,000 to $87,000 – as of 1 July this year.
“This will stop around 500,000 taxpayers in each and every year from paying more than the 32.5% marginal tax rate. They will be in the middle income tax bracket with all other average wage earners,” the statement from Morrison said.
“This is about providing room in our tax system for average full-time wage earners to earn more without being taxed more.”
However, multi-national corporations are in the firing line, with new efforts to combat tax avoidance.
The Government will create a Tax Avoidance Taskforce in a bid to shine a spotlight on multinational tax avoidance and secure revenue. Morrison says the taskforce is expected to raise more than $3.7 billion in tax liabilities between now and July 2020.
He reveals the Government will provide the ATO with $679m for the Taskforce over four years to strengthen efforts to ensure that multinational companies, private companies and high wealth individuals pay the right amount of tax.
“The Taskforce will work closely with its partner agencies including the Australian Crime Commission, the AFP and the AUSTRAC. New legislation will be introduced allowing the ATO to improve information sharing and analysis with ASIC which will lead to a more efficient approach to dealing with tax crime,” Morrison said.
“The Taskforce gives the Commissioner even more capacity to secure more revenue for the Australian community and ensure individuals and companies are paying the right amount of tax to support the services Australians need.”