In a move which will benefit some small financial planning practices, the Government has announced that from 1 July, small companies with an annual turnover of less than $2 million will have their tax rate lowered from 30 per cent to 28 per cent.
As well, the Federal Treasurer, Joe Hockey has said that, with immediate effect, small businesses will be able to claim an immediate tax deduction for each item they purchase up to $20,000, something he said would instantly reduce their tax liability.
Announcing the measure in his Budget speech, Hockey claimed that the measure represented the introduction of the lowest small business company tax rate in almost 50 years.
“Most small businesses are not run as companies. So we will also give an annual five per cent tax discount of up to $1,000 a year for unincorporated businesses,” he said.
The Treasurer claimed that the measure allowing an immediate tax deduction for small businesses on items up to $20,000 would benefit the 96 per cent of Australian businesses.
“This will be of enormous benefit to their bottom line and help businesses with their cash flow,” he said.
