Anyone who operates a small business in Australia will already know the company tax rate has reduced from 30% to 27.5% in the last 2 years. The Morrison lead Liberal party plans to lower the company tax rate to even lower levels if elected in May.
If you operate a business through a company structure and have a turnover of less than $50 million, then these tax cuts apply to you. The proposal aims to lower the current rate of company tax to 25% by the 2021-22 year. The suggested benefits of this proposal are to encourage small business to invest these tax savings in creating more jobs for Australians.
The Liberal party believe the previous tax rate reductions for small business are responsible for the lower unemployment rate currently being experienced in Australia.
If you don’t operate a small business through a company, don’t worry, you’re not forgotten. Under the current tax rules anyone operating a small business (turnover less than $5 million) through any other entity other than a company, receives an 8% tax discount (capped at $1,000). This discount is touted to be increased to 16% (capped at $2,000).
The above tax cuts are Liberals attempt at assisting more than 970,000 small business across Australia who currently employ more than $5 million Australians.