Tax break for majority of practices
Up to 90 per cent of financial advice practices are likely to be eligible to take advantage of small business tax incentives outlined in last night’s federal Budget.
Yesterday, Treasurer Joe Hockey announced $5.5 billion of Budget measures to encourage small businesses to “have a go”, including an immediate 100 per cent tax write-off for assets costing less than $20,000.
In addition, companies with a turnover of less than $2 million will be eligible for a tax cut of 1.5 per cent, down from 30 to 28.5 per cent, in a move the treasurer described as a “historic” initiative for small businesses.
Speaking to ifa, Forte Asset Solutions managing director Steve Prendeville – who has provided professional valuations for hundreds of financial advice firms – says most Australian practices are likely to meet the eligibility criteria, estimating that 90 to 95 per cent will have an annual turnover of less than $2 million.
Business consultant Michael Drage of Nakodo concurred with Mr Prendeville’s numbers, but added that advice firms structurally linked to accounting practices are likely to be sent over the $2 million threshold.
AFA chief executive Brad Fox warmly welcomed the Budget’s small business measures, telling ifa that, at a “rough guess”, at least 80 per cent of his membership would be eligible for the tax break.
“The Budget represents a realistic attempt to unfreeze the wheels of small business across the economy,” Mr Fox said in a statement issued this morning.
“This represents an incentive for financial advisers to bring forward changes to how they do business including office refits and technology upgrades.”
However, small business financial adviser and Boutique Financial Planners president Dacian Moses told ifa that the $2 million cut-off is “arbitrary” and questioned the policy’s effectiveness.
“I think someone told the government that small business is the engine room of the economy and so they tried to come up with a few ideas that will magically create jobs and growth, because as far as I can tell jobs and growth are the only way we will ever get back to surplus,” Mr Moses said.
“So I am not sure that the tax break for small business is really going to do very much but, heaven forbid, I make a profit, I will take it and say thank you very much.”
What impact would a tax break and $20,000 asset deductibility have on your business? Have your say below.
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