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Jobs and growth

Sticking to our national economic plan for jobs and growth in a stronger, new and more diversified economy

Backing work and investment with lower taxes

Lower taxes will encourage workforce participation and business investment to improve growth and create the jobs of the future

The Government will enable average full–time wage earners to earn more without being taxed at a higher rate by increasing the middle income tax bracket from $80,000 to $87,000.

This will ensure that around 500,000 Australians will be kept out of the second highest tax bracket. This is a key first step to maintaining the rewards for effort that risk being eaten away as wages rise.

The Government is also introducing new measures to combat corporate tax avoidance to help ensure that companies pay the right amount of tax. These measures are expected to raise $3.9 billion over four years. This includes targeting multinationals that shift profits offshore to avoid paying tax.

The Government will also back small and medium sized businesses by reducing their tax rate, starting with businesses with a turnover of less than $10 million on 1 July this year. The tax discount for unincorporated small businesses will also be increased and extended.

Over ten years the Government will back in investment by decreasing the tax rate on all companies to 25 per cent by 2026–27. This will make Australian companies more internationally competitive in a tough global market place.

These changes to the tax system are expected to increase business investment. This means higher living standards for Australians and a permanent increase in the size of the economy of just over one per cent in the long–term.

Australia’s corporate tax rate will be more competitive

Growing Small Business

Small businesses are the engine room of the economy

Last year the Government made it easier for small businesses to operate, grow and employ more Australians by lowering their costs and reducing red tape. This was driven by a reduction in their tax rate of 1.5 percentage points for small companies, a 5 per cent tax discount for unincorporated small businesses and immediate deductibility of assets that cost less than $20,000.

This year the Government will go even further and introduce new measures to help small businesses invest in and grow their business.

The small business entity annual turnover threshold will be increased from $2 million to $10 million from 1 July 2016. This will provide over 90,000 additional small businesses with access to tax concessions including the reduced corporate tax rate and the instant asset write-off provisions.

The Government will reduce the corporate tax rate for businesses with turnover less than $10 million per year to 27.5 per cent from 1 July 2016. This lower rate will be extended to other businesses over time through a schedule of phased reductions.

An 8 per cent unincorporated tax discount will be provided to unincorporated businesses with turnover less than $5 million per annum, capped at $1,000 per year from 1 July 2016 for the following eight years. The discount will increase to 16 per cent in increments from 2024 to 2026 to coincide with the staggered reductions in the corporate rate.

These measures form part of the Government’s Ten Year Enterprise Tax Plan which will encourage investment, grow the economy and create jobs.

The Government will reduce the corporate tax rate for businesses with turnover less than $10 million per year to 27.5 per cent from 1 July 2016.

We are helping over 3 million small businesses to invest and grow

2015 Budget

Tax changes for businesses with turnover below $2 million:

  • Company tax rate for small businesscut to 28.5 per cent.
  • 5 per cent unincorporated tax discount.
  • Immediate tax deductibility on each asset costing less than $20,000.
  • Benefits around 3 million small businesses.
2016 Budget
  • Small business entity turnover threshold increased to $10 million per annum for most small business concessions.
  • Company tax rate for small business cut to 27.5 per cent.
  • Unincorporated tax discount increased to 8 per cent for businesses with turnover below $5 million.
  • Access to tax concessions increased to over 90,000 additional small businesses.