Tax relief on the table for small business in 2015

By Justin Inskip, Director, Westlawn Business Services
17 February 2015

A number of tax and legislative changes are expected to take effect during 2015 which will impact small business. Among these is a proposed small business tax cut of at least 1.5%, greater ASIC scrutiny of company directors and a broadening of access to the Small Business Superannuation Clearing House.

PPL scheme abandoned

At the beginning of this month, the Prime Minister hammered the final nail in the coffin of his contentious Paid Parental Leave scheme. As reported in the Australian Financial Review on 2 February, the PM said of the scheme’s demise: “We sought the advice of the Productivity Commission and I have listened to the feedback from my colleagues and from mums and dads around Australia – and they have said that, with our current budget constraints, the better focus now is on childcare if we want higher participation and a stronger economy.

“So a bigger, better PPL scheme is off the table.”

The PPL scheme was to be funded by a 1.5% levy imposed on Australia’s 3,000 largest companies (those with annual profits of $5 million or more). The levy is now expected to be dropped, however, a proposed cut to the corporate tax rate from 30% to 28.5% for those 3,000 biggest companies that would have paid the PPL levy is now unlikely to go ahead.

It’s a different story for small and medium businesses outside the top 3,000 companies, however.

Tax cut for small business

Federal Treasurer, Joe Hockey, stated that the government was still consulting over the future of company taxation following the axing of the PPL system but he guaranteed that small businesses would get a tax cut as was promised before last year’s federal election.

“I say emphatically, we will ­deliver the 1.5% cut in taxation for small business and we want to do more,” Hockey said.

The tax cut for small business will form part of a jobs package according to the Prime Minister.

“The new industries of tomorrow are likely to be started by the small businesses of today. The best antidote to sunset industries is sunrise ones – and these are most likely to emerge from an enterprising small business,” said the PM.

The Australian reported on 6 February that the expected cut in the corporate tax rate to 28.5% for small companies outside the top 3,000 will “create a two-tiered corporate tax structure.”

Independent South Australian senator Nick Xenophon supports giving small business a boost as they are a key driver of employment.

“It would be good for employment and I think fundamentally popular without costing the budget too much,” he said of the two-tiered structure.

And the Greens have said they would also support the two-tiered corporate tax structure as it would shift the burden away from small business towards Australia’s largest companies.

So, while small business can look forward to some welcome tax relief in the second half of the year, there are a number of other changes in the pipeline that small business also needs to know about.

Rohan Harris, principal at law firm Russell Kennedy, told SmartCompany that franchising, privacy and company directorship are all areas of legislative change that small businesses need to watch out for in 2015.

Company directors’ responsibilities

“Throughout 2014 the Australian Securities and Investments Commission (ASIC) worked with a number of state and federal government agencies as part of an ATO chaired ‘Fix It Squad’,” Harris told SmartCompany.

“One of the recommendations from the squad was for ASIC to work with small business to increase awareness of what it means to be a company director.

“Company directors can also expect ASIC will continue to be on the lookout for small business directors who breach their duties and should be held accountable.

“I expect that ASIC will continue to look to disqualify directors of failed companies, particularly in the construction, labour hire, transport, security and cleaning industries where there have been a disproportionate number of allegations of illegal phoenix activity,” Harris said.

Small Business Superannuation Clearing House

The ATO is now running the Small Business Superannuation Clearing House (SBSCH) which was previously administered by Medibank.

This is a free online service for businesses with 19 or fewer employees and allows employers to pay super contributions in one transaction to a single location to reduce compliance costs.

With the eligibility criteria for the service expected to broaden this year, visit the ATO’s website for more information on the service and to register.

ATO: More support, cutting red tape, making it easier
Judy O’Connell, Assistant Deputy Commissioner Active Compliance Small Business and Individual Taxpayers at the ATO, says that in 2015, the Tax Office is “providing more support, cutting red tape and making it easier for small business to meet their tax and super obligations”.Some of the ATO’s initiatives include:

    • The Small business newsroom providing a one stop shop for small business tax and super information. “This year we are continuing to co-design further enhancements with small businesses”.
    • Small business assist providing easy access to information and tools that help small business meet their obligations. Web chat provides a way to have real-time, online conversations with an ATO customer service officer.
    • The ATO-App available from App stores provides a range of tools and services for small businesses.
    • SuperStream a faster, easier way to make super payments electronically. All contributions are treated in the same way, whether payments are sent to a default or choice fund.

If you have any questions concerning the above changes expected to take place throughout 2015, contact your Westlawn Business Services Accountant.

Copyright © 2015


Westlawn Business Services Pty Ltd provides this information for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers.
Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation.