13/05/2015 - 05:04

Hockey turns to small business for economic revival

13/05/2015 - 05:04

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Accelerated depreciation for small businesses, a tough new multinational tax avoidance law and a $5 billion concessional loan scheme for northern Australian infrastructure development were among the new policies announced in last night’s federal budget.

Mr Hockey has unveiled a small business package worth more than $5 billion.

Accelerated depreciation for small businesses, a tough new multinational tax avoidance law and a $5 billion concessional loan scheme for northern Australian infrastructure development were among the new policies announced in last night’s federal budget.

For the most part, the budget’s details were well known during the lead up, but the government did deliver a few surprises.

One such policy was a $1.8 billion accelerated depreciation package for small businesses, which will come in addition to the previously flagged company tax rate changes.

From budget night until 2017, small businesses will be able to claim tax deductions on asset purchases of up to $20,000.

The deductions apply to individual items, meaning businesses can claim the concession on each purchase below the threshold.

A cut in the corporate tax rate from 30 per cent to 28.5 per cent for small business was announced as expected, targeted at companies with turnovers of less than $2 million annually.

To complement this, the government announced a 5 per cent tax discount for unincorporated small businesses, to be capped at $1,000 per person.

Source: Budget 2015

The combined package will cost around $5.5 billion.

Other small business measures included removing fringe benefits tax on electronic devices, and loosened rules for crowdsourced equity funding.

In his speech, Treasurer Joe Hockey said he had grown up with parents running a small business and highlighted the Coalition's small business credentials.

“We are the only government that will deliver tax cuts for small business because we want small business to grow and employ more Australians,” he said.

“But we recognise that small business, in order to succeed, needs better cash flow and better tools for innovation as well.”

On youth unemployment, the government softened its approach, reducing the waiting time for Newstart allowance to four weeks from its previously mooted six months.

For the regions, Mr Hockey announced a $5 billion northern Australia funding package, although details were light.

“We will partner with the private sector and governments of Western Australia, the Northern Territory and Queensland, to provide large concessional loans for the construction of ports, pipelines, electricity and water infrastructure that will open our Northern frontier for business,” he said.

“This commitment to nation building adds to the record $50 billion in transport infrastructure we announced in last year’s budget.

“Infrastructure that is now, as I speak, under construction.”

On the other side of the ledger, the budget was littered with ‘revenue integrity measures’, including new multi-national tax anti-avoidance legislation, simultaneously introduced last night into the House of Representatives.

That new law, if passed, will mean companies caught cheating on tax will pay back double what they owe, plus interest.

The government additionally introduced legislation into the House for a GST on downloads, the so-called ‘Netflix tax’.

Overall, revenue measures will pay off the tax cuts forecast in the government’s small business package and add about $1.6 billion across the forward estimates to revenue.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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