The Budget 2016 has certainly been one targeted at small business owners.
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In tonight’s budget, small and medium sized businesses will receive a tax cut as the Government lowers the company tax rate for small firms to 27.5 percent. The Government will also be increasing the eligibility threshold from $2 million to over $5 million.
The Council of Small Business Australia (COSBOA) said that lifting the threshold to $10 million would be significant.
“This would be a very big change and really good for the economy. It sends a really good message and a lot more people who turn over more than $2 million can take advantage of that, like your local pharmacy,” said Peter Strong, COSBOA chief executive.
Increasing the threshold will potentially benefit 100,000 small to medium-sized enterprises.
In last year’s budget, small businesses with turnovers of up to $2 million were given a tax cut from 30 percent to 28.5 percent.
Under the new threshold, more small businesses will also be given access to the unlimited $20,000 instant asset write-offs which were introduced last year.
Yesterday, Scott Morrison said the change will give businesses the ability “to save and reinvest back in their businesses.”
The Government hopes the tax cut for small to medium-sized enterprises will support employment and encourage investment in innovation. It is part of the Turnbull Government’s efforts to spur growth in the non-resources sector as the economy transitions from the mining boom.