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It’s a small business tax cut budget. But beware the ATO

Thursday, May 14, 2015

This week’s Budget has received wide praise, principally because it’s a ‘small business people budget’. And it deserves praise on this front. Ken Phillips' analysis in Business Spectator explains that it’s a list of seemingly small items that make for one big package for small business people.

The Budget repeats last week’s announcement for start-ups which included:

  • Removing the risk of a capital gains tax bill if you change your business structure;
  • Investigation into removing/easing corporate regulation on small business;
  • A single site for business registrations;
  • Better tax arrangements for employee share schemes; and
  • Opening up crowd-sourced equity funding as NZ and UK have done.
And adds more including:
  • 1.5 % tax deduction for incorporated small business people;
  • 5% tax discount (up to $1,000 a year) for all other small business people, including sole traders; and
  • The ability to immediately claim each business asset you buy up to $20K in value as a business expense in the year you paid for the asset (a computer, car, etc.)
Finally, we have independent contractors properly accommodated. If you work for yourself and don’t employ anyone—that’s about 1 million of us—we too receive the tax reductions. It’s a big breakthrough. Small Business Minister Bruce Billson deserves our thanks for his efforts with this.

But beware the Australian Taxation Office. It can destroy this tax reduction for any one of us because it persists in declaring self-employed people to be employees. ICA had another case of this bought to its attention just last week.

Robert Gottliebsen put just this ATO threat to Bruce Billson at a post-Budget breakfast, asking if the Tax Commissioner should be sacked. Talk about fiery! Read Robert’s explanation (reproduced with permission).


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