Most Read Contributor in Australia, September 2016
A key component of the Federal Budget is the Government's
$5.5 billion small business package. The centrepiece of the Budget,
it contains a number of initiatives that aim to positively impact
small businesses, and in particular, start-up businesses.
a 1.5% cut to the company tax rate for small businesses,
reducing it to 28.5%;
a single online registration site to streamline new business
changes to upfront deductions for professional start-up
expenses, including legal fees;
beneficial changes to employee share schemes; and
the removal of obstacles to crowd-sourced equity funding.
Three of these initiatives are discussed in more detail
Do you qualify as a small business?
The initiatives implemented in the small business package apply
only to businesses with an aggregated annual turnover of less than
Upfront deductions for professional start-up expenses
Starting from 1 July 2015, start-ups will now be able to
immediately deduct a range of professional expenses associated with
starting a new business. These include professional, legal and
accounting advice. The current laws allow costs to be deductible
over a five year period. This change should provide immediate cash
flow assistance in the formative years of a new enterprise.
Additional tax concessions for employee share schemes
The Australian start-up community has long been calling for
changes to employee share schemes. Currently, employees who are
issued shares or options as part of their remuneration package are
required to pay income tax at the time those shares or options are
received, regardless of whether they have realised any financial
benefit. It has long been complained that existing laws place
Australian start-ups at a significant commercial disadvantage when
compared to overseas competitors.
With effect from 1 July 2015, employee share schemes will now be
more accessible and provide additional tax assistance to eligible
companies through a start-up concession. Draft legislation released
in January 2015 is already before Parliament. The small business
package provides some technical changes that will ensure employees
will not have to pay tax until they receive a financial benefit
from the shares.
Removal of obstacles to crowd-sourced equity funding
The Government has also pledged to provide easier access for
small businesses to crowd-sourced equity funding. This announcement
follows consultation earlier this year in which many technology
sector entrepreneurs and investors called on the government to
establish a regulatory framework for the burgeoning source of
early-stage capital. However, rather than abolishing the need for
start-ups to register as a public company before they can run a
crowd-sourced equity funding campaign, the Government has instead
pledged to make it easier and cheaper for start-ups to become
public companies and develop a new regulatory framework for
crowd-sourced equity funding. It will do so by providing the
necessary funding to Australian Securities and Investment
Commission to simplify reporting and disclosure requirements for
start-ups. Similar reforms have already been implemented in the
United States, Britain, New Zealand and much of Europe. Draft
legislation is due to be tabled before November, following further
We will continue to update you on material developments
affecting small businesses and start-ups.
This publication does not deal with every important topic or
change in law and is not intended to be relied upon as a substitute
for legal or other advice that may be relevant to the reader's
specific circumstances. If you have found this publication of
interest and would like to know more or wish to obtain legal advice
relevant to your circumstances please contact one of the named
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