Last week, the 2016 budget was released and this year there are a few more things that will be relevant to your veterinary business. We will focus on the matters in this newsletter that are likely to affect you, and leave all the other stuff out:

Larger businesses will now be able to access concessions offered to small businesses (from 1 July 2016)

This is a huge concession! Currently only businesses with a turnover of under $2 million were allowed to access small business concessions such as:
-Lower corporate tax rate of 28.5% for companies
-Immediate deductions for any assets under $20,000 (as opposed to depreciating)
-Simplified stock rules
-Accounting for GST on a cash basis (which is a great time saver)

The threshold has now been increased from $2m to a huge $10m turnover! There is a very significant number of veterinary clinics that turn over between $2m and $10m and therefore this will be a huge and positive change for the veterinary industry.

Reduction of the company tax rate to 27.5% – small businesses (From 1 July 2016)

This is a small reduction in tax rate for small businesses. Again, this reduction can be applied to businesses under $10m turnover as opposed to $2m turnover before the budget. The goal will be to reduce company tax for these entities to 25% over the next 10 years.

Individual Tax Bracket Change (From 1 July 2016)

Currently the individual tax rate changes from 32.5% to 37% at an income of $80,000. The budget has raised this bracket to $87,000. This is a very welcome win for most of you, allowing you to take a bit more money out of your business before moving into a higher tax bracket.

Reduction on Superannuation concessional contributions (From July 2017)

Unfortunately, the budget has reduced the amount of concessional super contributions (the contributions made through your PAYG wages and salary sacrifice) from $30,000 to $25,000. This is a small reduction in the tax benefits that can be gained from superannuation.

Reduction in lifetime cap on superannuation contributions (from last night!)

For anyone who was thinking of dumping a large lump sum non-concessional contribution (money that has already been taxed) into super, the new budget is obviously closing down this benefit. Where in the past an individual could continually put $180,000 into super every year and even future pay 3 X $180,000 to include next 2 years, the new budget is putting a lifetime cap of $500,000 of non-concessional contributions on each individual.