What you need to know – Federal Budget savings to invest in your firm
- Company tax rate reduced by 2.5 per cent to 25 per cent for businesses turning over less than $50 million annually.
- Individual tax rate reduced by 2.5 per cent to 30 per cent.
- Instant asset write-off scheme cap increased to $30,000 and extended to 30 June 2020.
Small to medium enterprises (SMEs) are set to benefit from Treasurer Josh Frydenberg’s recent Federal Budget announcement. With financial respite on the cards, the 2019-2020 financial year is set to be an opportune time for smaller firms to invest in their businesses. The announcement of a reduced company tax rate and extended instant tax write offs place SMEs in a prime position to focus on improving their own business’ offerings.
Tax time triumph
With the announcement of a reduction to the company tax rate from 27.5 per cent to 25 per cent by 2021-22, SMEs with an annual turnover of less than $50 million will pocket the savings.
Tax time savings will also be felt with a reduction to individual tax rates. Individuals working in small to medium businesses who are earning between $45 000 and $200 000 will benefit from a reduction of the tax rate from 32.5 per cent to 30 percent from July 2024. The reduction means that small firms will be in a better position to add value to their own businesses. With a 2.5 per cent reduction for both companies and individuals, now is the time for partners to start considering how their firm can pass the benefit onto their clients.
You may like to consider using these savings to make your firm not only more accessible, but more efficient. The recent launch of self-service technology with Zaliet Service Portals lets you reduce-non-billable time while making your firm available around the clock. This means you can maintain quality client service by empowering clients to manage their appointments, make enquiries and pay invoices from any device. Your clients can even complete instruction forms ahead of time so you can get to work on matters faster.
In 2019, the SME community braced for the end of the Federal Government’s instant asset write-off scheme, set to occur on 30 June. However, the budget extended this scheme for an additional year. Not only will small to medium firms be able to capitalise on the extended claim period, but the amount that can be claimed will also be increased. Treasurer Frydenberg’s commitment to extend the $20,000 cap to $30,000 will mean greater taxable deductions for small firms looking to invest in infrastructure to improve their business and client service. These extensions place small to medium firms in an ideal place to consider how their own internal processes could be better served by new or upgraded assets.
Upgrading your practice management software by switching to LEAP is an easy way to get value from the Budget’s savings. It’s important not to underestimate the efficiency your firm can gain from investing in quality practice management software. With LEAP, you’re able to work anywhere, anytime with cloud-based software and the LEAP Mobile App. When paired with a Service Portal, you can take comfort in knowing that you’ll be able to reduce time spent on administrative work when your clients are able to do some of the work for you.
With the end of financial year on the horizon, now is the time for firms to get ahead. How can you leverage these savings to enhance your business and offer your clients superior service?0