BUDGET 2019: WHAT IT MEANS FOR SMALL BUSINESS
2 April 2019
Some of Australia’s unincorporated small businesses may welcome the news of personal income tax cuts announced in tonight’s Federal Budget but many will not reap the benefit this year, says the Institute of Public Accountants (IPA).
“Some small businesses could be beneficiaries of personal income tax cuts, but tonight’s Budget announcement is in fact quite limiting in the early stages,” said IPA chief executive officer, Andrew Conway.
“The current low- and middle-income tax offset has in effect been increased from $550 to a new maximum of $1,080 but only for those within the income bracket level of $48,000 to $90,000. Those beyond this bracket will be waiting until 2024 – 2025.
“In other words, tonight’s announcement provides an increase of $550 in tax offset, for the chosen few.
“On the flip side, there are indirect benefits associated with the immediate tax relief for the low- and -middle-income earners (up to $1,080 for singles or up to $2,160 for families). Benefiting some 4.5 million individuals will help to incentivise spending and economic growth which has recently slowed and is in need of a boost to maintain economic growth.
“The Government’s infrastructure announcements can be of benefit to small business as long as they can access and be active participants in the supply chain.
“While it is also pleasing to see that the unincorporated small business tax discount will be increased to 16 per cent by 2021/22, it is disappointing, however, that the cap has remained up to $1,000 each year. This $1,000 cap is now out of kilter with company tax rates that have been progressively reduced in recent years, putting unincorporated entities at a disadvantage,” said Mr Conway.