As an RDA Barossa B2B provider, we are sometimes asked what grants and government funding is available for a particular small business. Unfortunately, in these hard economic times, the answer is most often, “None” – the governments simply cannot afford it.
There are, however, other ways to get government “funding” in the form of tax breaks, many of which are only available to small businesses (usually defined as a business with a turnover of less than $2 million).
Some of these are available now, some are only available for a limited time and some are not available until you are selling your business.
So, what are some of these concessions?
$20,000 Asset Write-off
Applies to the purchase of any business asset bought between 7.30pm on 12 May 2015 and 30 June 2017 with a purchase price of LESS THAN $20,000.
If the business is registered for GST, then the purchase price can go over $20,000 just so long as the “net of GST” price is less than $20,000.
Note, too, that there is no limit to the number of assets that you purchase each year that are under this threshold. That is, the threshold applies to each asset, not to the total of assets purchased each year.
28.5% Company Tax Rate
For the year ended 30 June 2016 and beyond, the tax rate for small companies is now 28.5%, down from 30%.
Unincorporated Small Business Tax Discount
Individual taxpayers with business income from an unincorporated small business will be eligible for a small business tax discount. The discount will be five percent of the income tax payable on the business income received from an unincorporated small business entity.
The discount will be capped at $1,000 per individual for each income year, and delivered as a tax offset.
The start date for this measure is 1 July 2015.
R&D Tax Concession
A 45% refundable tax offset is available for eligible companies with turnover of less than $20m per annum. It is a complicated process which is best discussed with your accountant before you go too far with it.
Small Business Capital Gains Tax (CGT) Concessions
There are four concessions available to small businesses to reduce or eliminate CGT on the sale of business assets otherwise subject to CGT. In brief:
15 Year Exemption
If the business has owned the asset for more than 15 years and the “relevant individual” is over 55 or otherwise permanently incapacitated and the asset is being sold as part of a retirement plan, no CGT is payable.
Active Asset 50% Reduction
Normally, CGT is calculated on 50% of the gain made. If the asset being sold is an active business asset, however, then a further 50% discount is applied bringing the total CGT discount to 75% of the total gain (ie, CGT is calculated on only 25% of the gain).
Small Business Rollover
When a small business asset is sold, any calculated gain can be rolled over and applied against the cost of any replacement assets purchased within two years of the original sale.
Small Business Retirement Exemption
Essentially, an individual can make a taxable capital gain of $500,000 over their lifetime and not pay any tax. Remember, this is the gain, not the sale proceeds, and the individual can still apply the other CGT concessions listed above first before eating into the $500,000 limit.
Although not a direct injection of cash, there are some tax savings out there to small businesses to help them along.
As with all advice of this type, it is very general and so cannot be relied upon for your own personal circumstances. You must seek your own advice as there are many conditions and exclusions that might apply to your situation.
If you would like to know more, please contact Morgan Reynolds on 8563 2620.