Treasury: Regional Australia—Driving Our Economy 2017–18

The Treasury provides policy advice on a range of issues from macroeconomic policy settings to microeconomic reform, social policy, as well as tax policy and international agreements and forums.

The Treasury portfolio, through the Australian Taxation Office, administers a range of transfers and benefits back to the community that assist individuals and businesses that satisfy the eligibility criteria, including those that are located in regional areas.

Further details are provided in the Treasury Portfolio Budget Statement.

New Initiatives

Extending the Immediate Deductibility Threshold for Small Businesses

The Australian Government will extend the 2015–16 Budget measure Growing Jobs and Small Business—expanding accelerated depreciation for small businesses by 12 months to 30 June 2018 for businesses with aggregated annual turnover less than $10.0 million.

Small businesses, including those in regional areas, will be able to immediately deduct purchases of eligible assets costing less than $20,000 first used or installed ready for use by 30 June 2018. Assets valued at $20,000 or more can continue to be placed into the small business simplified depreciation pool, and the pool can be immediately deducted if the balance is less than $20,000 over this period.

This measure will improve cash flow and support small businesses to invest in assets that will help them grow, such as small businesses in regional areas seeking to purchase assets to expand or set up their business in new locations.

Current Initiatives

Ten Year Enterprise Tax Plan—Increase the Small Business Entity Turnover Threshold

The Australian Government is increasing the small business entity turnover threshold from $2.0 million to $10.0 million per annum from 1 July 2016. The current $2.0 million annual turnover threshold will be retained for access to the small business capital gains tax concessions, and access to the unincorporated small business tax discount is being extended to entities with turnover less than $5.0 million per annum.

Over 90,000 additional business entities will gain access to the small business tax concessions, such as the lower small business corporate tax rate, immediate tax deductibility of certain assets and simplified depreciation pooling provisions as a result of this measure.

This measure forms part of the Australian Government’s Ten Year Enterprise Tax Plan announced in the 2016–17 Budget, which is encouraging Australians to work, save and invest.

Ten Year Enterprise Tax Plan—Reduce Taxes on Business

The Australian Government is reducing the company tax rate to 27.5 per cent in 2016–17 for companies with aggregated annual turnover less than $10.0 million. The tax rate will then be phased down to 25 per cent by 2026-27.

The Australian Government is also increasing the tax discount for unincorporated businesses from five per cent to eight per cent in 2016–17. The discount will then incrementally increase to 16 per cent in 2026-27. The current cap of $1,000 per individual for each income year will be retained.

The tax discount applies to the income tax payable on the business income received from an unincorporated small business entity. Access to the discount is being extended to individual taxpayers with business income from an unincorporated business that has an aggregated annual turnover of less than $5.0 million.

This measure forms part of the Australian Government's Ten Year Enterprise Tax Plan announced in the 2016–17 Budget, which is encouraging Australians to work, save and invest.

Income Tax Averaging for Primary Producers—Allowing Re-entry

Tax averaging allows primary producers to smooth out their income tax liability. A primary producer may opt–out of tax averaging and previously was not able to access the scheme again. From 2016–17 primary producers can re–access tax averaging ten years after the year in which they chose to opt–out.

This measure is part of implementing the Australian Government’s Agricultural Competitiveness White Paper.

Working Holiday Maker Reform Package

The Australian Government has implemented a comprehensive package of reforms to meet seasonal labour supply needs and ensure Australia remains an attractive destination for working holiday makers.

From 1 January 2017, the tax rate applying to working holiday makers is 15 per cent up to $37,000, with ordinary marginal tax rates applying after that.

The 15 per cent tax rate is internationally competitive in terms of after tax income compared to key working holiday maker destinations, such as New Zealand, the United Kingdom and Canada.

The reform package received Royal Assent on 2 December 2016.

Australian Small Business Advisory Services

The Australian Small Business Advisory Services program improves the capacity of established, not–for–profit small business advisory service providers to deliver low cost small business advisory and information services.

Under the Australian Small Business Advisory Services Business Solutions 2014 Round, 33 projects are funded until 31 March 2018. Two additional Australian Small Business Advisory Services National Interest projects have also been funded. Since the projects commenced in March 2015 over 17,500 services have been provided to small business operators and those who intend to start small businesses in 200 local government areas across Australia. Twenty–two of these projects deliver services to regional or remote Australia.

On 29 April 2016, the Australian Government announced the establishment of seven new Australian Small Business Advisory Services under the Northern Australia Tourism Initiative. These projects received $4.2 million in funding for three years from June 2016. The majority of the Australian Small Business Advisory Services Business Solutions Northern Australia Tourism Initiative projects are delivering services in regional or remote northern Australia.

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