We look at some of the key aspects of the 2014 Federal budget and the resulting impact on small businesses and startups
1. Federal budget impact on Small business
The federal budget has impacted small business in the following ways:
a) Lower company tax rate
As part of the budget measures, the government has will cut the company tax rate by 1.5 percent from 1 July 2015. This will bring the current company tax rate of 30 percent down to 28.5 percent, benefiting many small businesses that use a company structure. Businesses with more than $5m in taxable income will not be in a better overall position as they will be required to pay a levy of 1.5 percent to fund the new paid parental leave scheme.
b) Superannuation contributions
Compulsory superannuation contributions for employees will rise from 9.25 percent to 9.5 percent from 1 July 2014. Although the federal government had previously flagged that this increase would be delayed, the superannuation contribution percentage will now be frozen at the new level of 9.5 percent until June 2018.