Small business was a clear winner in the May 2015 budget and now these popular measures have passed both Houses of Parliament and received Royal Assent without amendment, so what are they?

Tax Cuts

A small business (one with a turnover of less than $2 million) from 1 July 2015 will be subject to tax rate reductions. Companies have had their tax rate lowered by 1.5% from 30% to 28.5% whereas other entities like sole traders and partnerships, will attract a 5% discount on their tax bill, capped at $1,000 per year.

$20,000 immediate tax deduction

The highly anticipated small business $20,000 asset write-off scheme will lift the threshold where an asset is immediately deductible from $1,000 to $20,000. These arrangements will apply from Budget night, 12 May 2015, and continue until 30 June 2017. 

There is no limit on the number of eligible assets costing less than $20,000 that you can immediately depreciate, but any purchases above the $20,000 will be treated as part of normal small business depreciation arrangements. It is important to note that if your business is registered for GST, the asset cost is taken to be the GST exclusive amount.

All assets including those that are new and second hand are included in these new rules but like most things there are a few exclusions. These include horticultural plant, capital works, software development pools, and certain primary production assets, all of which are subject to their own depreciation or deduction rules.

Whilst every business situation needs to be addressed individually, it is clear that many may benefit from these measures so it important to seek advice.