The Australian Government is fast-tracking tax-cuts five years earlier than planned for small and medium businesses.
Businesses with an aggregated turnover below $50 million will be taxed 25 per cent in 2021-22, instead of the current 27.5 per cent. Previous legislation stated the tax cuts would be implemented by 2026-2027. The tax cuts will be gradual with a decrease to 26 per cent for the 2020-21 financial year.
The $29.8 billion tax cut will benefit three million businesses that employ nearly seven million Australians. For example, small businesses like an independent pub or cafe making $500,000 profit, will have an additional $7,500 in 2020-21 and $12,500 in 2021-22 to grow their business, increase staff or manage cash flow.
The Government has also announced a 16 per cent increase for their tax discount for unincorporated entities, which will apply from the 2022 income year, rather than the 2027 income year.