On 12 May, the Federal Government handed down its annual budget. It contained the following key points relevant to women in business:
- A reduction in the small business tax rate
- An immediate tax deduction for small businesses
- The introduction of a single means-tested child care subsidy
However, it is important to recognise that Budget announcements are just that—an announcement of the Government’s proposals. Before becoming law, these measures require the support of both houses of parliament; and therefore, it is after the Budget when the fate of each proposal is decided.
While waiting for confirmation of the fate of these proposals, carefully consider and plan how your business could benefit. Should you spend the small business tax deduction on a coffee machine?
Some points to consider:
- Identify assets that will add a realisable benefit in increased sales, decreased costs, or improved productivity.
- Will the asset open up new markets or customers for your business?
- Will the asset bring the running costs of the business down?
- Will the asset significantly improve staff time management, or the speed and efficiency of fulfilling orders?
- Consider and account for the incidental costs associated with this asset e.g. installation costs (more lighting or power outlets), running costs (electricity, water), maintenance cost, supplies, consumables and licenses, insurance, user training or accreditation.
- Obtain professional advice from a financial planner, accountant, or tax advisor on what items constitute an “asset” as defined by the relevant legislation.
If it is simply nice to have, such as a coffee machine, feel comfortable that your business can justify the opportunity costs of using the small business tax deduction on this “nice to have” in place of any other item.
Other significant items announced in the Budget include:
- No new taxes on superannuation were introduced.
- The Assets Test thresholds and Assets Test taper rate were increased.
- Changes to the indexation of the Age Pension and deeming thresholds were abandoned.
- The former home rental income exemption for aged care residents was removed.
Regardless of where you are placed in life and business—whether you are a small business owner, just planning to start-up, extracting profit from the business, or planning your exit—it is important to understand the impacts of each Budget proposal and to have a plan in place to maximise potential opportunities and changes.
For details and comments on the Federal Budget announcements, prepared by Equitas Partners, please click here.