Steven Dobbyn explains the proposed change to the small business tax concessions recently announced in the 2016 Budget. Here is the transcript from the video above:

While it didn’t receive as much attention as the proposed changes to superannuation the proposed change to the small business tax concessions stands to impact on business in the nearer term with a proposed introduction date of 1 July 2016.

Just to briefly explain the change, the existing turnover threshold for eligibility to the concessions was increased to $10M from $2M. So if legislated this opens up access to a number of tax concessions.

This includes:

  • the lower company tax rate of 27.5%
  • simplified depreciation rules including the immediate write off of assets costing less than $20,000 and acquired by 30 June 2017
  • simplified trading stock rules
  • and greater options in terms of accounting for GST and PAYG Income Tax Instalments along with a number of other concessions.

Unfortunately the turnover threshold in relation to the Small Business CGT Concessions remains unchanged at $2M.

As with all budgets we’d advise caution prior to these changes being legislated, especially with this being an election year budget. So it may not be until at least September/October before we have an answer on this.

And lastly the other thing to be wary of if the measures are legislated is the creative marketing flyers of asset financing companies which are sure to start appearing on emails from early 2017 onwards. Just remember in the case of the immediate write off concession eligible businesses receive an acceleration of the depreciation, not an increase to the depreciation over the life of the asset.