When tonight’s budget is delivered we will welcome all changes that will assist in stimulating growth in the family business sector.
The main changes we would like to see are::
Small Business Tax Concessions
From 1 July 2016 the business company tax rate reduces to 27.5%. This is a positive step towards decreasing the tax burden for businesses in a company structure with a turnover of < $10m. We are looking to the Government to continue with their proposed future tax cuts and raising the threshold on what is considered a small business.
One thing to note with this legislation is, it isn’t a company tax rate cut. So if you operate a business in a family trust and distribute profits to a company, the company is not a business and the tax rate will remain 30%.
$20k Small business immediate deduction
We are hoping the Government will continue with the $20k immediate write off on depreciable items post 30 June 2016. What will assist family businesses stimulate growth is if the threshold is increased from the current level of $2m and put in line with the Small Business tax concession rate of $10m. This threshold increase needs to be offered to all business structures, not limited to company’s.
Small Business CGT Concessions
Currently the threshold for small business enterprise is $10m but the Small Business CGT concession remains at the $2m turnover threshold. We are looking for the 2 thresholds to be aligned and increased to $10m turnover.
An increase in the threshold will encourage family business owners to roll the proceeds into another business or into their Superannuation Fund to save for retirement.
With the new $1.6m superannuation limit, people will be looking for more ways to increase their superannuation balance. The retirement exemption is a perfect way to increase their balance and not contravene any of the contribution caps.
Cash Economy Crackdown
The Government has announced the cash economy will be an area of focus in tonight’s budget. This is great news for family businesses as it ensures fairness across the economy.
2% Budget Repair Levy
The temporary budget repair levy was always supposed to finish on 30 June 2017. We are looking to the Government to keep this promise. This will ensure any family business operating via a partnership, trust or sole trader will also receive a tax cut and stimulate their business growth.
Should the Government deliver on all of the above initiatives we will see business growth across the family business sector.