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FEDERAL BUDGET 2017 – What does it mean for Hair and Beauty Salon Owners?

Posted May 10, 2017

Budget Night 2017 was one that was highly anticipated by all Australians, as we wait to see what our current government has planned for businesses, housing affordability and reducing the deficit – all hot-button topics that raised eyebrows during the election campaign.

Most importantly out of the evening, The Government will back small businesses by reducing their tax rate to 27.5 percent, starting with businesses with a turnover less than $10 million on 1 July this year.

Over the next ten years, the Government will encourage investment and higher-paid jobs by decreasing the tax rate on all companies to 25 per cent by 2026–27.

From 2016-17, the discount will be available to businesses with annual turnover of less than $5 million, up from the current threshold of $2 million, and will be increased to 8 per cent. The maximum discount available will remain at $1,000 and should apply to all salon owners.

Over the next decade, this small business discount will be further expanded in phases, to a final discount of 16 percent.

Access to a number of tax concessions will be provided by increasing the threshold for these concessions to $10 million, up from the current $2 million thresholds. These changes will benefit over 90,000 businesses.

From 1 July 2016 all businesses with annual turnover of less than $10 million will have access to:

  • simplified depreciation rules, including immediate tax deductions for asset purchases of less than $20,000 until 30 June 2017
  • simplified trading stock rules, giving salon owners the option to avoid an end of year stock take if the value of your stock has changed by less than $5,000;
  • a simplified method of paying PAYG instalments calculated by the ATO, which removes the risk of under or over estimating PAYG instalments and the resulting penalties that may be applied;
  • the option to account for GST on a cash basis and pay GST instalments as calculated by the ATO;
  • other tax concessions currently available to small businesses, such as fringe benefits tax (FBT) exemptions (from 1 April 2017 to align with the FBT year); and
  • a trial of simpler business activity statements (BAS), reducing GST compliance costs, with a full roll-out from 1 July 2017.

These threshold changes will not affect eligibility for the small business capital gains tax concessions, which will remain available for businesses with annual turnover of less than $2 million or that satisfy the maximum net asset value test.

Due to the number of changes occurring to taxable income for salon owners, HABA encourages all of our members to seek proper advice from a financial advisor to ensure that you are benefiting appropriately from these new laws and protecting yourself from any liability. If you have any questions about how the new laws affect staff or workplace law, please contact HABA on (02) 9221 9911 and speak to our team of Industrial Relations Experts today.

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