Accountant Mooroolbark – The Budget and Businesses

The 2016 Budget was announced at the start of May 2016, and unlike previous years, the general public seemed fairly accepting of the financial and tax changes. The Budget was the first step in putting Australia on track towards a new and desired economy, as we transition out of the mining boom and look to create other opportunities to invest, innovate and employ. While some have labelled it to be an “election budget” aimed to please voters; it is hoped that the Budget will be a key action towards a long-term plan. The main topic of interest has been who will actually benefit from the Budget, and as our professional Accountant Mooroolbark from CLY Tax Accountants & Bookkeepers previously predicted, it is the Small Businesses and Companies.

As of July 1 2016, small businesses will receive a Tax cut at a reduced rate of 27.5 per cent. Affecting about 870,000 business and 3.4 million workers, business entities with an annual turnover of $10 million will be eligible for this cut. This threshold has increased from the original $2 million amount. The lower rate will be progressively introduced to all business by 2023-24, with aims to make Australian firms more competitive on an international level.

Companies will also be given a tax rate reduction of up to 25 per cent, which will be progressively applied over the next 10 years, in correspondence to their annual turnover, as shown below. This will make Mooroolbark company directors feel better supported, when they are preparing their future business Tax Return Mooroolbark.

Income Year Rate Annual aggregated turnover threshold
2015-16 28.5% $2 million
2016-17 27.5% $10 million
2017-18 27.5% $25 million
2018-19 27.5% $50 million
2019-20 27.5% $100 million
2020-21 27.5% $250 million
2021-22 27.5% $500 million
2022-23 27.5% $1 billion
2023-24 27.5% No limit
2024-25 27% No limit
2025-26 26% No limit
2026-27 25% No limit

These purpose of these reductions is to encourage employers to expand their businesses, either domestically or internationally, which is hoped to lead job creation and a decrease in the unemployment rate. Furthermore, the Government plans to create more financing options for businesses, creating easy access to investment, generating growth and job creation.

Additionally, from July 1 2017, a 40 per cent tax will apply to the profits of multinational corporations who divert tax profits out of Australia. This is a key measure of the Government’s Tax Integrity Package, and targets companies that shift profits out of Australia via third parties, in order to avoid paying the full amount of Australian taxes. While this will only apply to certain companies, it aims to keep more money in Australia to be out towards growing our economy and funding other Budget or Government related plans.

At CLY Tax Accountants & Bookkeepers Mooroolbark, our accountant and tax agent have the expert knowledge you need to manage and process your business’ tax and accounting commitments.

If you are unsure on how these changes could affect you and your business, or are seeking Tax and Accounting advice, please Contact Us on (03) 9736 9316.