Government walking a fine line on Budget cuts
Expanding the small business tax turnover threshold and the middle-tier income tax bracket will see the Government hoping its assumptions are true, the Institute of Public Accountants (IPA) believes.
While IPA chief executive, Andrew Conway, backed Treasurer, Scott Morrison's, Budget moves to support small business, he warned the reforms could impact the nation's ability to reduce the Budget deficit.
"Last year's Budget delivered some steps in the right direction with tax cuts and asset write-offs and this year, the Government has kept to their word when it comes to supporting the most critical sector of our economy," Conway said.
"A further reduction in the income tax rate for small business (from 28.5 per cent to 27.5 per cent for 2016-17) combined with an increase in the eligibility turnover from $2 million to $10 million for incorporated businesses will be well received by an additional 90,000 small businesses.
"They will also be eligible for other small business tax concessions (including the $20,000 instant asset write-off).
"Unincorporated small businesses won't completely miss out. The benefits will be extended by increasing the eligibility turnover threshold from $2 million to $5 million per annum, and increasing the discount to eight per cent (and 16 per cent over the next decade). Disappointingly, the $1,000 cap per annum remains.
"Addressing the bracket creep issue is also a positive with changes for those earning between $80,001 and $180,000 being extended to $87,000; this is good news for both individuals and unincorporated small business owners.
"We acknowledge that the Government is relying on the "growth dividend" from these measures to reduce the budget deficit. Until then, we are walking on a tight rope."
AUTHOR
Nicholas O'Donoghue
Recommended for you
A Victorian accounting firm – in which Count holds a 40 per cent equity stake – has announced the acquisition of an accounting client book through a $1.4 million transaction.
Australian Ethical has reported its net profit after tax (NPAT) fell 15% to $9.6 million for the year ended 30 June, while its underlying profit after tax (UPAT) declined 7% compared with the year prior, to $10.3 million.
Insignia Financial has announced a 59% increase in its underlying net profit after tax (UNPAT) to $234.5 million in FY22.
Having completed their educational qualifications, those advisers who remain in the industry are reporting being “run off their feet” with new clients.
