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Small Business Tax Cut

Autor:   •  August 13, 2017  •  2,166 Words (9 Pages)  •  302 Views

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The Sole traders will enjoy less tax

Most of the Small businesses in Australia instead of incorporating as companies are generally incorporated as sole proprietorship, partnership, or as a trust. This is why, the rule is now applicable on these categories of small businesses as well as those unincorporated business firms where the annual turnover is less than $2 million. This point can be explained with the following example.

For instance, a sole proprietor is entitled for a deduction of 5%. In this manner, if a tax for $16000 is pad by him, he will get a deduction of $800. With the new policy, since the amount that has been capped for deduction is $1000, thus, they could claim for the deduction as a tax credit while filing their tax returns (Ridd, 2015).

Share Schemes

Previously, the rule was that even if any of the employees are unable to make any money or the shares are worthless, then also they were forced to pay taxes even on the share options that are offered to the employees in the old taxation laws. But in the new proposed policies, the employees will have to pay taxes only if the employees would be able to realise some benefits from these options.

Digital Upgrades

For the next 4 years, the government has proposed $255 million under the government plan that will be used to update the computer systems and will enhance the ways of interacting with the individuals and the business firms. This is going to be good news for those small business owners who want to interact with the government for several different things. With the upgraded systems, the business owners would be able to use the online services such as registration of business names, payment of taxes etc. in an easier and comfortable manner (Morning, 2015).

Deductions on Start-up Costs

Most of the professional expenses are entitled to get an immediate deduction for the businesses that are starting as new business firms in the area of professional, legal and accounting advices.

Subsidy on wages

In order to employ such people that have been unemployed from a longer period of time, are young or old, the government has proposed an amount of $1.2billion to help the business firms in the form of subsidies. According to the government, to meet employer demands there will be more flexibility for the job seekers even if several other types of wage subsidy programs are replaced, in total the same amount of $6500 is the subsidy for employing a young job seeker and $10000 is the subsidy for the mature-aged job seeker (Ridd, 2015).

Crowd Funding

Crowd funding refers to the process of procuring of capital in smaller amounts from a large number of investors. It is often for a specific purpose such as new product development (Ridd, 2015). Now small businesses can invite a large number of investors to help them to grow. Apart from this, several restrictions and the red tape that are associated with this form of equity funding are removed by the new laws introduced in the budget (Ridd, 2015).

GST on Digital Imports

The goods and services tax will also be imposed by the government on the digital products and services that are bought from overseas. It will also be applied to the software, so the businesses need to be aware. They will be entitled for a claim of most of the GST that is paid by them. For common people it will apply to the movies, games and songs that they buy from overseas companies.

Tax Relief for Changing the Structure of the business

The small business firms will not be required to pay the capital gains tax while changing their legal structure. In the existing policies, the small business firms including the sole proprietorship as well as the partnership firms were required to pay a capital gain tax while making any changes in their legal structures. This capital gain tax was a potential hit for all of these firms. But with the new policies, these business firms can change their legal structures without incurring and capital gain taxes.


The previous implemented policies were focused on promoting the interest of the large business firms. The small business sector is always taken for granted by these parties.

The new tax cut will benefit the small business firms in several ways:

- It will help the small business firms to acknowledge their administrative costs.

- It is focused on encouraging the growth of the sector of small business firms.

- Will help the small business firms to use the extra income for expansion, innovation, and investment.

- Small businesses will be relieved from the pressure of income tax and other taxes.

Australian government has been able to recognize that the strength of the Australian economy is based on the health of the small business sector. With the above analysis, it would not be wrong to say that lowering the taxes is a viable and a feasible option. Several countries including South Korea, Belgium, France, Canada, Spain, UK, Netherlands, USA have already reduced their taxation rated for the small business firms. The unemployed people in Australia who have the skills will be supported by the government to reach their future goals and igniting their careers. The small business and job package will also contribute to the growth of the small business firms and employment. In this manner, the small business owners will be having several prospects for growth and opportunities.


Colgan, P., 2015. Tony Abbott admits he 'probably overdid it' with captain's calls. [Online] Available at: [Accessed 25 May 2015].

Ensbey, D., 2015. Tax relief on the table for small business in 2015. [Online] Available at: [Accessed 24 May 2015].

Hutchens, G., 2015. Small business tax cut 'will not be as effective' as Abbott government thinks. [Online] Available at: [Accessed 25 May 2015].



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