Joe runs a business in the agricultural sector as a sole trader. He is considering expanding his business and is wondering how the recent budget announcements will impact him.
Under announced measures, any small business with turnover below $2 million will be able to claim an immediate deduction for each asset with a cost of less than $20,000 which is acquired from 12 May 2015 until 30 June 2017. Therefore, Joe decides to buy a tractor for $18,000 and a slasher for $15,000 giving an immediate deduction of $33,000.
Joe is also looking at putting in new lane ways and a new dam. From 1 July 2016 all primary producers will be eligible for an immediate deduction for capital expenditure on fencing and water facilities. Further, fodder storage assets will be depreciable over three years. As a result, Joe decides to delay construction until the 2016/17 income tax year which may bring a more favourable tax outcome.
As Joe is an unincorporated small business he will also be eligible for a 5% discount on his business income tax payable up to a maximum of $1,000 per income year from the 2015/16 tax year onwards.
Please note the above budget initiatives have not been passed through Parliament at time of writting this article and are therefore subject to change.
If you have questions please contact Andrew Marshall or Janine Orpwood at Langley McKimmie Chartered Accountants on (03) 5427 8100 for an initial consultation.