Tax Law Changes and Impacts for Small Business

It’s likely the case that most of our clients don’t love tax law as much as we do, which is fair enough. For those who are in a small business, you're probably busy hunting for opportunities to grow and do things you’re passionate about. So don’t worry, we’ll keep you across the changes in Australian tax laws that have significant impacts on SMEs.

Recent changes have made it easier for small businesses to access capital, invest in new equipment, and manage their cash flow. They’ve also helped to increase the competitiveness of small businesses and provide much-needed relief. So if you’re a small business owner, the points below are worth understanding and using to your advantage.

Reduction in the Corporate Tax Rate
One of the most significant changes to the tax laws for small businesses is the reduction in the corporate tax rate. In 2017, the government commenced a phased reduction of the corporate tax rate for small businesses. For businesses with a turnover of up to $50 million, the corporate tax rate has now been reduced from 30% to 25%. This reduction has provided small businesses with much- needed relief and has helped to increase their competitiveness.

Temporary Full Expensing (Instant Asset Write-Off)
Another change that has had a significant impact on small businesses is the introduction of the temporary full expensing (previously called the instant asset write-off). This allows small businesses to claim an immediate deduction for an asset that is purchased and used for business purposes of any value (previously limited to $150,000). This change has made it easier for small businesses to invest in new equipment and technology, which can help to improve their productivity and efficiency. This measure is temporary and due to expire on 30 June 2023, so be sure to consider this in your end of year tax planning.

Access to Capital
The Australian Government has also introduced changes to the tax laws that affect the way small businesses can access capital. For example, the government has made it easier for small businesses to raise equity through crowdfunding platforms, which can help them to access new sources of funding. Additionally, the government has also introduced changes to the tax laws that make it easier for small businesses to access debt financing, which can help them to grow and expand. If you’d like to talk to us about how any of the above points might relate specifically to you, we’d be only too happy to help.