Small  business  tax  issues  2015  /  2016

Jeff  Funnell  –  RightWay    Australia

Sydney | July 2015

Agenda  –  small  business  tax  breaks

• $20,000  instant  asset  write  off  • Tax  rate  cut  to  28.5%  • Immediate  write  off  access  for  start  ups  • CGT-­‐roll  over  relief  for  changes  to  entity  structure  

• Changes  to  employee  share  schemes

Instant  asset  write  off

• What  is  it?  – businesses  with  an  annual  aggregated  turnover  under  $2m  can  claim  an  immediate  deduction  for  purchases  under  $20k  

– applies  until  30  June  2017  

• Who  is  eligible?  – businesses  with  an  annual  aggregated  turnover  under  $2m  

– the  business  must  be  actively  trading

Instant  asset  write  off

• What  is  covered?  – any  (eligible)  asset,  new  or  second  hand,  involved  in  running  a  business.    

– first  acquired  at  or  after  7:30pm,  12  May  2015,  and  first  used  or  installed  ready  for  use  on  or  before  30  June  2017.  

• What’s  not?  – assets  over  $20k  – ineligible  assets  including  certain  horticultural  plants  and  software  developed  in  house  

– artificial  or  contrived  arrangements

Tax  cuts  for  small  business

• 1.5%  cut  for  small  companies  

• Available  from  2015/16  income  year  

• Dividends  can  be  franked  up  to  a  maximum  of  30%

Tax  cuts  for  small  business

• Proposed  change  

• 5%  tax  discount  on  income  from  unincorporated  small  business  activity  

• Aggregated  annual  turnover  of  less  than  $2m  

• Capped  at  $1,000  per  individual  per  income  year

Tax  cuts  for  small  business

• Proposed  change  

• Small  businesses  can  deduct  a  range  of  professional  expenses  associated  with  starting  a  new  business,  available  from  the  2015/16  income  year.

CGT  rollover  relief  for  changes  to  entity  structure

• Proposed  change  

• Proposed  measure  to  allow  small  businesses  with    an  aggregated  annual  turnover  of  less  than  $2m  to  change  legal  structure  without  attracting  a  CGT  liability.  

• Changes  will  apply  from  2016/17  income  year.

Employee  Share  Schemes

Overview  • Employees  given  shares  or  opportunity  to  purchase  shares  in  their  employer’s  company  

• Great  way  to  attract,  retain  and  motivate  staff  

• Unattractive  taxing  point

Employee  share  scheme  changes

Key  changes  

• Applies  from  1  July  2015  

• Changes  to  when  the  employee  is  taxed  on  the  value  of  the  share  or  option  for  start  up  companies    

• Employee  can  hold  /  control  up  to  10%  of  shares  in  the  employer  company  

• Tax  deferred  scheme  has  increased  to  15  years

Employee  share  scheme  changes

What  constitutes  a  start  up  company?    

• Unlisted  company  

• Aggregate  turnover  not  more  than  $50m  

• Company  less  than  10  years  old  

• Employer  is  an  Australian  resident

Employee  share  scheme  changes

• Start  up  concession  conditions  

– Intent  to  hold  options  held  for  at  least  3  years  

– Discount  must  be  no  greater  than  15%  (shares)  

– Exercise  price  not  less  than  market  value  (options)  

– safe  harbour  methodology  available,  if  certain  conditions  met

Employee  share  scheme  changes

• Standardised  ATO  documentation

Just  who  are  RightWay?

Just who are RightWay? Jeff Funnell + Tim Fairweather | Sydney | July 2015

We are business advisors operating from an accountancy platform where we provide regular financial reports throughout the year to help SME business owners make better decisions to help them grow.

Just who are RightWay? Jeff Funnell + Tim Fairweather | Sydney | July 2015

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