Still digesting the 2016 Federal Budget and not sure what it means for your business? Read on!

Tax : you’ll pay less of it

When it comes to tax there are some big bonuses for SMEs. Whilst the changes are set to cost the government over $5bn in reduced revenue, it is anticipated this will more than be offset by new growth and employment opportunities. So what can you expect?

• From July 1 2016, the SME tax rate will be lowered to 27.5% with the turnover threshold increased from $2m to $10m. This threshold will gradually increase over the next few years allowing more businesses to access the lower rate – a threshold of $100m is earmarked for 2019-2020.
• Thereafter, the plan is to keep increasing the threshold until 2024 and then start reducing the tax rate back to 25% from 2026.
• The unincorporated small businesses discount will increase to 8% and the threshold for eligibility will be under $5m rather than the current capping of $2m.
•  SMEs with a turnover of less than $10m are also set to benefit from other tax incentives including small business depreciation pooling provisions and simplified trading stock rules.

Innovation : You’ll get support

The budget helped put a framework around the Government’s 2015 innovation statement. Here’s how:

• The Government will support co-investment in start-ups through Australian research institutes
• The Government has included $7.8 million in the budget to facilitate the introduction of Crowd Sourced Equity Funding via ASIC who will create a regulatory framework to facilitate the use of CSEF, with simplified reporting requirements.
• There will be changes to make it easier to raise start up capital, for example, crowd-funding and employee share schemes and to make it easier for start-ups to raise capital, as well as changes to company tax loss arrangements.
• Australian cyber security businesses will get a chance to partner with The Government as part of Australia’s Cyber Security Strategy.
• There will be a boost to the CSIRO Accelerator program, designed as an incubator for innovative Sci-Tech projects.

Equipment write off bonus

The $20,000 instant asset write-off scheme means instead of claiming deductions bit by bit, you can deduct the full value of every asset purchased to the value of $20,000. The threshold has also jumped up to businesses turning over up $10 million from July 1 2016. You’ll have to get in quick though; this scheme is set to expire on June 30, 2017.

So, while it’s been described as a conservative budget, the clear winners are SMEs. We are happy to see incentives being put in place to help recognise and support the backbone of our economy.