Budget Update 2015-2016
2015 – 16 FEDERAL BUDGET
“JOBS, GROWTH & OPPORTUNITY”
The Federal Treasurer, the Hon Joe Hockey MP, handed down the Liberal Party’s second Budget last night, minus the pain delivered in his first Budget announced 12 months ago. The Budget was a major boost for small business with a reduction in the tax rate for small businesses, whether operating through companies or not. The tax rate for companies with an aggregated annual turnover of less than $2m will be reduced by 1.5% (i.e. from 30% to 28.5%) from the 2015/16 income year. A 5% tax discount for individual taxpayers with business income from an unincorporated business with an aggregated annual turnover of less than $2m will also be introduced from the 2015/16 income year. The threshold below which small businesses can claim an immediate deduction for the cost of assets will be temporarily increased from $1,000 to $20,000. The rules preventing small businesses from re-entering the simplified depreciation regime for five years after opting not to use it will also be temporarily suspended. Although not delivering a UK style Diverted Profits Tax, large multinationals with global turnovers of greater than $1bn would be faced with more stringent and draconian anti-avoidance provisions aimed at directing profits derived from Australians to low or no taxed countries.
The Government is not expecting to return the Budget to surplus until the start of the next decade.
Some of the major taxation changes emanating from the Budget are outlined below.
SMALL BUSINESS & PERSONAL TAXATION Personal tax rate
The 2015-16 Budget did not make any changes to the current personal tax rates. It is noted that legislated increases in the tax-free threshold to $19,400 from 1 July 2015 are due to be repealed, but the legislation designed to remove the increase in the threshold and change in tax rates are still before Parliament. The table below outlines the currently legislated and future personal tax rates and thresholds for resident individuals that will apply for the 2015-16 financial years, should the current Bill before Parliament be passed:
Residents: Personal tax rates and thresholds (excluding Medicare)*
2015-16 (Currently legislated)
2015-16 (Changes Before Parliament)
Taxable income ($)
Taxable income ($)
0 - 19,400
0 - 18,200
19,401 - 37,000 37,001 - 80,000 80,001 - 180,000
19 33 37 47
18,201 - 37,000 37,001 - 80,000 80,001 - 180,000
* Incorporating the 2% Budget repair levy to cease from 30 June 2017
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