It was great for family businesses that the Government remained committed to their Business company tax cuts but was this enough?
Unfortunately, the tax cuts only impact small businesses with a turnover of less than $10m who operate through an Australian company structure.
Wth no movement in the personal tax rates, any family business that operates via a partnership or as a sole trader has received no tax reform or tax relief. The removal of the federal budget deficit levy for individuals, will reduce the tax rate for individuals earning more than $180,000 by 2.5% but in saying that an increase in the medicare levy will see individual tax rate increases by 5%. The other interesting point to note is at this stage the removal of the budget deficit levy is a budget announcement, we will need to wait and see whether it becomes legislation.
Many family businesses are structured via a family trust and they also missed out in the budget. Should they distribute to a company, the tax rate will remain at 30% as the company is not a business and will no have access to the reduced company tax rate. Also, distributing to individuals, they have received no tax relief.
We do see this budget as a step in the right direction for family business but unfortunately it is only stimulating growth for a portion of the family businesses.