Small business boost
Following the Federal Budget announcement, the Government has now passed law to change the tax rate for small businesses structured as a company. The new tax rate is effective from 1 July 2015.
The company tax rate has been reduced from 30 per cent to 28.5 per cent for small businesses. Eligibility for the lower tax rate is based on turnover and not taxable profit, meaning fewer businesses are eligible. To qualify for the lower tax rate a small business needs to have turnover of less than $2 million for the relevant year.
The lower tax rate will help businesses that qualify by increasing their available cash flow. Small businesses often find that cash flow can be one of their biggest problems so this measure should provide some relief.