Australia’s small businesses were praised and rewarded by by Treasurer Josh Frydenberg in the pre-election budget on Tuesday.
Instead of making life easier for large corporates, a move that isn’t popular with voters, Frydenberg turned his attention to Australia’s smaller firms.
The treasurer, who hailed small businesses as “the engine-room” of the economy, cut small business tax from 27.5% to 25%. That will apply to all companies with an annual turnover of less than $50 million.
The move will benefit about 970,000 companies employing about 5.2 million workers, the Coalition government said.
Companies currently facing a 27.5% rate will see the reduction to a 25% rate by 2021-22 — a move that’s five years earlier than planned. The standard company tax rate is 30%.
Frydenberg also increased the instant asset write-off threshold from $25,000 to $30,000 until 30 June 2020. It is the second increase this year as the write-off was increased from $20,000 to $25,000 in January.
Frydenberg said that the perk can be used every time an asset (such as tools or equipment) under that amount is purchased.
The instant asset write off was also expanded to medium size businesses that have a turnover of up to $50 million.
He said it will allow “a cafe to get a new fridge or grill, a plumber to buy new tools or a courier a new van.”
Frydenberg said the aim is to help businesses to reinvest in their company, employ more workers and grow.
“We have lowered the small business tax rate and in this Budget will increase and expand access to the instant asset write-off,” the Coalition wrote.
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