Small Business Update
Recent changes to Australian tax laws have introduced several measures aimed at supporting small businesses. Key updates include:
1. Small Business Energy Incentive
Under the Treasury Laws Amendment (Support for Small Business and Charities, and Other Measures) Act 2024, businesses with an aggregated annual turnover of less than $50 million can access a bonus deduction equal to 20% of the cost of eligible assets and improvements that enhance energy efficiency. This temporary measure encourages small businesses to invest in energy-efficient assets, potentially leading to reduced energy costs.
2. Instant Asset Write-Off
The same legislation provides a temporary increase to the instant asset write-off threshold for small businesses with an aggregated annual turnover of less than $10 million. This allows businesses to immediately deduct the cost of eligible assets, facilitating quicker tax relief and encouraging investment in new equipment and technology.
3. Employee Share Scheme (ESS) Tax Changes
Recent legal changes have impacted Employee Share Schemes, which allow employees to purchase shares in their employer's business. These schemes are a valuable tool for small businesses to attract, retain, and motivate employees by sharing the company's growth and productivity. It's important for small business owners to stay informed about these changes to effectively utilize ESS.
4. Access to Capital
The Australian Government has introduced measures to ease capital access for small businesses. Notably, the government has simplified the process for small businesses to raise equity through crowdfunding platforms, providing new funding avenues. Additionally, changes to tax laws have made it easier for small businesses to access debt financing, supporting growth and expansion.
5. Payroll Tax Threshold
Business owners have advocated for an increase in the payroll tax threshold, which has remained at $1.2 million since the early days of the COVID-19 pandemic. The current 5.45% payroll tax on wages above this threshold is considered burdensome, especially given rising wage costs. There is ongoing discussion about adjusting this threshold to alleviate financial pressures on small businesses.
6. Tax Deduction for Meal and Entertainment Expenses
The Coalition has proposed a new tax deduction policy allowing small businesses to claim work-related meal and entertainment expenses up to $20,000. Eligible deductions include tickets to football matches, rounds of golf, and trips to the movies, excluding meetings at brothels, strip clubs, and alcohol expenses. This two-year trial targets businesses with an annual turnover of up to $10 million and aims to support small businesses adversely affected by previous governance.
These changes reflect the government's efforts to support small businesses through tax incentives, simplified access to capital, and adjustments to existing tax obligations. It's advisable for small business owners to consult with tax professionals to understand how these changes may specifically impact their operations.