This document summarizes key budget measures affecting business and other sectors as announced in the Australian federal budget. For small businesses, the company tax rate will be reduced and various tax deductions and exemptions increased. Start-ups will see new tax deductions for professional expenses. Measures are also outlined to address tax avoidance by large multinational companies. The budget also includes infrastructure spending, changes to paid parental leave and pensions, and increases to child care subsidies.

1. A Snapshot of the Budget Affecting Business

2. Small business
• The company tax rate for incorporated businesses with
annual turnover up to $2 million will fall by 1.5 percentage
points to 28.5 per cent from 1 July, 2015. Unincorporated
businesses such as sole traders and partnership structures
with annual turnover up to $2 million will receive a 5 per cent
tax discount, capped at $1000, through their year-end tax
returns from 1 July, 2015. This will cost the Government $3.3
billion in the period to the end of the 2018-19 financial year.
• A temporary measure will allow small businesses with turnover
below $2 million to get an immediate tax deduction for
every asset they acquire that is valued up to $20,000 for tax
purposes – up from $1,000 previously. This will apply from
Budget night until the end of June 2017 and cost $1.8 billion.
• Capital gains tax rollover will be reformed to enable small
business to change the legal structure of their business from
the 2016-17 financial year without incurring capital gains tax.
Rollover relief is currently available for individuals who
incorporate but all other changes of entity type trigger a
capital gains tax liability.
• A fringe benefits tax (FBT) exemption will apply from 1 April,
2016 for all businesses with an aggregated annual turnover
of less than $2 million that provide employees with more than
one portable electronic device, even where the devices
have substantially similar functions. Currently, an FBT
exemption only applies to more than one device if the
devices perform substantially different functions.
• The Government will release a consultation paper later in
2015 on potential changes to the Corporations Act to
reduce any unnecessary regulatory requirements for small
business.

3. Start-ups
• Start-ups will be able to immediately deduct professional
expenses incurred when they begin a business, such as legal
costs, rather than writing them off over five years. This will cost
the Government $30 million.
• The Government will provide $7.8 million over four years to
the Australian Securities and Investments Commission to
implement and monitor a regulatory framework to facilitate
the use of crowd-sourced equity funding, including simplified
reporting and disclosure requirements.
• Tax concessions for employee share schemes announced in
the Mid-Year Economic and Fiscal Outlook 2014-2015 will be
expanded after consultations on the draft legislation
identified minor technical changes that could be made.

4. Big business
• The Government plans to work with business to develop a
voluntary code for greater public disclosure of tax
information by large companies.
• A new tax avoidance law will be introduced in Part IVA of
the Income Tax Assessment Act 1936 aimed at
approximately 30 multinational companies with global
revenue of $1 billion or more that artificially avoid having a
taxable presence in Australia. It will apply from 1 January,
2016.
• The Government will double the maximum administrative
penalties that can be applied to companies with global
revenue of $1 billion or more that enter into tax avoidance
and profit shifting schemes. It will also implement the OECD’s
new transfer pricing documentation standards from 1 July,
2016.
• A retrospective cap of $100 million will apply to the amount
of research and development expenditure for which
companies can claim a tax offset at a concessional rate.
Expenditure beyond the $100 million cap will receive a lower
offset at the company tax rate. This measure will apply to
assessments for income years commencing on or after 1 July,
2014.
GST
• Subject to the unanimous agreement of the States and
Territories, GST will apply to digital products and services – for
example, Netflix – from 1 July 2017. This will raise $350 million
in the period to the end of the 2018-19 financial year.

5. Infrastructure
• The Government will establish a concessional loan facility of
up to $5 billion for private sector investment in infrastructure
such as ports, railways and pipelines in Northern Australia. The
loan facility will be open for applications from 1 July 2015.
Families, childcare and pensioners
• The Government is aiming to achieve savings of $967.7
million over four years by removing the ability of people to
“double dip” to get paid parental leave from both the
Government and their employers.
• It is delivering a $4.4 billion Families Package, including $3.5
billion over five years on child care assistance, a new
simplified Child Care Subsidy from July 2017, a $869 million
Child Care Safety Net for disadvantaged children and $843
million for preschool programs.
• Changes to the asset free areas for pensioners from January
2017 will allow 170,000 pensioners with modest assets to
receive a full or increased pension, but an increase in the
taper rate from $1.50 to $3 will mean those with substantial
assets of up to $1.2 million who are currently on part pensions
will receive a smaller pension or none at all.
Prepared by Pacific Finance Australia