06 April 2017

Lower taxes delivered for Corangamite small business

I was delighted to welcome Federal Small Business Minister , Michael McCormack, to Belmont today to discuss the Coalition Government’s historic tax cuts for small and medium size businesses.

Minister McCormack and I visited traders in High Street Belmont before convening a Small Business Forum, attended by senior representatives from the ACCC, the ATO and the Office of the Small Business & Family Enterprise Ombudsman.

Topics raised included new legislation to help small business combat unfair contracts, the black economy, merchant fees on credit cards and the importance of our government’s changes to competition law to prevent large companies abusing their market power.

ATO Assistant Commissioner, Robert Charles, spoke about the ATO’s work to prevent multinational tax avoidance and profit shifting after the Turnbull Government passed vital legislation, opposed by Labor.  Mr Charles said he hopes to recoup more than $3 billion in additional tax paid by these multinationals as a result of these measures.

Over 3.1 million small businesses in Australia – including the 16,920 small businesses in Corangamite – will pay less tax under the Coalition Government’s Ten Year Enterprise Tax Plan passed in Parliament last week.

Reducing the tax burden on small business gives Corangamite small business owners the chance to grow, to hire more locals and pay them more.

Under our plan, Corangamite businesses with turnovers up to $10m are now defined as small businesses and will pay a lower company tax rate of 27.5 per cent from this financial year, before eventually falling to 25 per cent.

The 27.5 per cent company tax rate delivers the lowest tax rate for small business in 50 years.

Cutting the company tax rate and broadening the definition of small business also means more local small businesses can now access the instant asset write-off program.

The Coalition Government’s Enterprise Tax Plan means more small businesses can instantly write-off new equipment worth up to $20,000 and claim it back straight away.

Anything from a stainless steel servery to photocopiers, computers or coffee machines can now be bought and claimed back against tax, freeing up cash flow for local small businesses, thanks to our changes.

Speaking at today’s forum, Small Business Minister Michael McCormack said the small business tax cut, simpler paperwork and greater support for small business are designed to take the pressure off small business, to help the sector grow and create local jobs.

“Cutting small business taxes has always been top of the Coalition Government’s agenda and I am delighted we have delivered the lowest tax rate since 1967,” Mr McCormack said.

LIST OF MEASURES: Company Tax Rates (%) passed by the Turnbull Government

Size 2016-17 2017-18 2018-19 2019-24 2024-2025 2025-26 2026-2027
Up to $10m 27.5 27.5 27.5 27.5 27 26 25
Up to $25m 30 27.5 27.5 27.5 27 26 25
Up to $50m 30 30 27.5 27.5 27 26 25

Other measures to Help Small Businesses

Measure Before – Business Turnover After – Business Turnover*
Increasing the tax discount for unincorporated small business Unincorporated Businesses with turnover up to $2 million; discount of 5% with a cap of $1,000 Businesses with turnover up to $5 million; discount of 8% this year, increasing in stages to 16% by 2026, with a cap of $1,000
Instant Asset Write-off on asset purchases up to $20,000 until 30 June 2017 and on-going simplified depreciation rules Write-off of $1,000 up to $2 million (prior to 2015-16) Up to $10 million  – $20,000 write-off expires on 30 June 2017
simplified trading stock rules, with the option to avoid end of year stocktake if the value of their stock has changed by less than $5,000; Up to $2 million Up to $10 million
a simplified method of paying

PAYG instalments calculated by the ATO, removing the risk of under or over estimating PAYG instalments and the resulting penalties that may be applied

Up to $2 million Up to $10 million
an option to account for GST on a cash basis and pay GST instalments as calculated by the ATO; other tax concessions currently available to small businesses, such as fringe benefits tax (FBT) exemptions (from 1 April 2017 to align with the FBT year) Up to $2 million Up to $10 million
other tax concessions currently available to small businesses, such as fringe benefits tax (FBT) exemptions (from 1 April 2017 to align with the FBT year); Up to $2 million Up to $10 million
a trial of simpler business activity statements (BAS), reducing GST compliance costs, with a full roll-out from 1 July 2017 Up to $2 million Up to $10 million

*These threshold changes will not affect eligibility for the small business capital gains tax concessions, which will remain available for businesses with annual turnover of less than $2m or that satisfy the maximum net asset value test.

6 April 2017