Last night’s federal budget included cuts to company tax rates for small businesses, which have been welcomed by industry groups.
Included in the pre-election federal budget was a broadening in the definition of small business, from a turnover of $2 million to $10 million a year. The current 28.5 per cent rate for small businesses will be lowered to 27.5 per cent.
Innes Willox of the Australian Industry Group called it “a shot in the arm for up to 60,000 small to medium-sized businesses and for the economy from 1 July this year.”
News Corp notes that the threshold will then increase to $25 million in 2017/18, $50 million in 2018/19, then $100 million in 2019/20. There will eventually be a flat company tax rate of 25 per cent in 2026/27, according to treasurer Scott Morrison (pictured).
Yesterday’s changes to small business taxation were “truly applauded” by the Australian Advanced Manufacturing Council, who said that it would assist smaller companies to grow and scale their operations and be more competitive globally.
“We called for an increase of the threshold to $20 million turnover in our Pre-Budget Submission. We’re delighted they have met us half-way,” said Jennifer Conley, executive director of the group, in a statement.
“Lowering the corporate tax rate over time is a positive support for the ambition of many of our small businesses to become medium-sized – and even large-sized.”