In line with the proposed reduction of the company tax rates, the Government also proposes an increase to the tax offset for unincorporated small businesses, namely sole traders, partnerships and trusts, will increase from 5% to 16% over a 10-year period.
The tax offset will initially increase to 8% from 1 July 2016, then to 10% in the 2024-25 year, 13% in the 2025-26 year and then the final rate of 16% in the 2026-27 year. However, the maximum discount will remain at $1,000. For the purposes of accessing the tax offset, the turnover threshold is increased from $2 million to $5 million from 1 July 2016.
Again, the proposed increase of the tax offset rate is a welcome move. However, this is at best some tinkering as evidenced by the increase of the threshold to ‘only’ $5 million (as opposed to $10 million for other concessions) and the maximum allowable tax offset amount remaining at just $1,000.