Appliance and consumer electronics retailers are set to win big after the 2015 Federal Budget handed down significant tax benefits to small businesses. The $5.5 billion small business package represents the single biggest spending item in the Budget.
As part of the new measure, businesses with an annual turnover of less than $2 million are now able to claim an unlimited number of tax deductions for items bought up to the value of $20,000. This measure does not cover stock purchases, but businesses can claim for items such as computers and other appliances. Any item up to the value of $20,000, which is used for running a business, will now be 100 per cent tax deductible. There is also no limit on the number of items a business can buy.
Small businesses will also have their tax rate lowered to 28.5 per cent from 30 per cent immediately.
Online appliance retailer Kogan.com is already running a tongue-in-cheek #BudgetFrenzy sale, offering discounts on the likes of televisions and laptops.
As reported by the Sydney Morning Herald, Harvey Norman chairman Gerry Harvey beamed due to the benefits his stores stood to gain from the budget. In turn, the Budget improved Harvey Norman’s (and other retailers) share price yesterday.
Many of the budget measures which effect retailers and small business were welcomed by the Australian Retailers Association (ARA) and the National Retail Association (NRA).
NRA chief executive Trevor Evans predicted the instant write-off of business purchases up to $20,000 would spur an instant jump in spending, which would flow quickly through the retail sector and the wider economy.
“This Budget hits almost all the right notes in terms of boosting consumer and business confidence. This was always going to be the critical test of the Abbott Government’s second Budget,” he said.
Both retail groups also welcomed the so-called ‘Netflix Tax’ which will impose the GST on digital products such as music and movies sold into Australia from overseas, but they also want to see it further extended to cover physical goods.
“While this tax is certainly a positive step, we must now ensure GST collection is extended to low value parcels. It should be just as easy to collect GST from Amazon as it is to collect GST from Netflix and Apple, meaning there is little excuse for the Federal and State Government’s not to move on collecting all GST on products under $1000 from overseas,” said ARA executive director Russell Zimmerman.
“The ARA has been leading the campaign to fix the under $1000 GST loophole for goods bought from overseas and is concerned that tonight’s budget did not offer any specific remedy to this issue. We do, however, commend Assistant Treasurer Josh Frydenberg on his leading position and commitment to solving this issue once and for all.”
The $20k small business tax break in a nut-shell
Who is eligible?
Registered businesses with an annual turnover of less than $2 million
What can be claimed?
Microwaves, coffee machines, bar fridges, computers, televisions, stereos etc. These, and many other items essential to running a business, are now 100 per cent tax deductible.
What can’t it buy?
This measure does not cover stock purchases or horticultural items.
When does it begin?
It already has and claims can be made until June 2017