The federal government’s latest budget contains plans to phase in substantial changes to business taxation rates, for both companies and unincorporated businesses. Here’s a brief rundown of the main changes.
Company Tax Rate Reductions
- From July 1, 2016 – the company tax rate for a business with a turnover of up to $10 million reduces to 27.5% (a 1% decrease from before).
- From July 1, 2017 – the 27.5% tax rate is to be applied to businesses with a turnover of up to $25 million.
- From July 1 2018 – the rate is to apply to businesses with a turnover up to $50 million.
This pattern will then continue to 2023, until all companies are able to access the 27.5% tax rate. By 2025, all companies should be eligible for a tax rate of 25%.
- From July 1, 2016 – small businesses that are not companies (for example sole traders, partnerships or trusts) with a turnover of less than $5 million will be eligible for an 8% discount on profit tax, up to a maximum of $1,000. This will be increased to 16% over ten years.
- Asset write-offs – small businesses can immediately write off assets purchased before June 2017 that are up to $20,000 in value.
- Simplified stock-takes – businesses with low variances in their stock levels may now be eligible to estimate their stock value at tax time, rather than having to do a full stock-take.
- New businesses – now have access to immediate deductions for a range of start-up costs such as legal and financial consultancy fees.
Of course, this is general information only. Your accountant should be able to provide you with more detailed tax advice that relates to your franchise business.