The 2014 Budget has brought about a number of changes affecting small businesses.
Corporate tax rate to offset PPL Levy
The Government has confirmed its commitment to cutting the company tax rate from 30 per cent to 28.5 per cent as of 1 July 2015.
However, for large companies with taxable incomes in excess of $5 million, any expected benefits from this rate cut will be largely offset by the imposition of the Paid Parental Leave (PPL) Levy at the rate of 1.5 per cent.
Fringe Benefits Tax
The Government announced that from 1 April 2015 until 31 March 2017 it will be increasing the FBT rate from 47 per cent to 49 per cent. This will result in a corresponding increase to the FBT gross-up rates and the FBT rebate.
Mature age workers
The Government has announced that businesses are now able to receive up to $10,000 in government funding if they hire a job seeker aged 50 or older in a wage subsidy program called "Restart."
Restart will begin from 1 July 2014 and will allow eligible employers to receive $3000 if they hire a full-time mature age job seeker who has been previously unemployed for a minimum of six months and also employ that person for at least six months.
After the job seeker has been working for the same employer for 12 months, the business will receive another payment of $3000, then another $2000 at 18 months and a final $2000 at two years.
To be eligible for the program employers will need to demonstrate that the job they are offering is sustainable and ongoing and that they are not displacing existing workers with subsidised job seekers.
The Mature Age Worker Tax Offset will also be scrapped and the savings from this will be redirected to the Restart program.
Unfair contract provisions
Small businesses will be protected from unfair contracts imposed by big businesses as they are now able to access the same unfair contract provisions currently available to consumers under the Australian Consumer Law.
The scheme will also include legislative reforms to make unfair terms in standard form contracts with small businesses void and help to provide a level playing field for small businesses.
R&D tax offset rates
In line with the cut to the company tax rate, the Government will also be reducing the rates of the refundable and non-refundable research and development (R&D) offsets by 1.5 percentage points, effective from 1 July 2014.
This means that for eligible companies with turnover:
- less than $20 million, the refundable R&D tax offset will reduce from 45 per cent to 43.5 per cent
- greater than $20 million, the non-refundable R&D tax offset will reduce from 40 per cent to 38.5 per cent