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Australian Parliament Passes Tax Measures Supporting Small Businesses — Orbitax Tax News & Alerts

On 15 June 2015, the Australian parliament passed tax measures included in the 2015 Budget to support small businesses. The measures include an increased asset value limit for accelerated depreciation and a reduced corporate tax rate.

Accelerated Depreciation

Accelerated depreciation for small businesses is expanded by allowing small businesses with aggregate annual turnover of less than AUD 2 million to immediately deduct assets they start to use or install ready for use, provided the asset costs less than AUD 20,000 (previous limit AUD 1,000). Assets valued at AUD 20,000 or more can be placed in the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% in each subsequent year. If the balance of the depreciation pool is less than AUD 20,000, the pool can be immediately deducted.

The change applies for assets acquired and installed ready for use between 7.30pm (AEST) 12 May 2015 and 30 June 2017.

Reduced Tax Rate

Small businesses with aggregate annual turnover of less than AUD 2 million will be allowed to benefit from a reduced tax rate of 28.5% (standard rate 30%). The rate cut applies from 1 July 2015.