Small business company tax rate changes
Currently the corporate tax rates are 30 per cent for companies with an annual aggregated turnover of more than $2 million and 28.5 per cent for companies with an annual aggregated turnover below this figure.
From 1 July 2016, the government proposes to change these rates to:
30 per cent for companies with an annual aggregated turnover greater than $10 million (but this rate is scheduled to fall to 25 percent over 10 years); and
27.5 per cent for companies with an annual aggregated turnover of less than $10 million.
These reduced rates are a very welcome boon for us, compared with other OECD (organisations for economic cooperation and development) members Australia has some of the highest small business tax rates. The following table sourced from the OECD tax database shows other members and how they compare versus us.
With less working capital needing to be allocated to business taxes, we can reinvest the difference into further improving our platform and services. This difference is especially profound coupled with the other incentives we utilise.
Advance QLD and the National Ideas Boom
Both Introduced in the 2015-16 budget, these projects directly support small to medium sized businesses develop their new ideas into innovations of the future. I have personally attended several Advance QLD seminars and have found each to be a brilliant source of learning and information for any up and coming business.
The Ideas Boom initiative is a national grant that provides tax breaks to small businesses with exciting ideas with the intention of removing the bias against taking risks and innovating. For more on ways businesses like out benefit from this grant check out their website.
Research and Development Tax Incentive
Introduced in 2011, the R&D Tax incentive has been a mainstay form of support for Working Mouse since its reimagining in 2011. As a business which prides itself on making bounds and new ideas in software development, we have been taking advantage of this tax incentive to reduce the risk involved in undertaking such a procedure. The incentive has two core components. Entities engaged in R&D may be eligible for:
- a 43.5% refundable tax offset (equivalent to a 150% deduction) for eligible entities with an aggregated annual turnover of less than $20 million, provided they are not controlled by income tax exempt entities
- a 38.5% non-refundable tax offset (equivalent to 133% deduction) for all other eligible entities (entities may be able to carry forward unused offset amounts to future income years).
As a result of the R&D incentive,Working Mouse has been empowered to make more adventurous decisions and as a result reap greater benefits including improvements to our overall competitiveness and productivity. This incentive is backed by the Australian department of industry, innovation and science and we look forward to continuing to benefit from this tax incentive for the years to come.
Youth Employee Measures
Change in employment by age group (original data) â€” January 2008 to March 2016 - Sourced from Bureau of Statistics
Look at any of the photos of our office on our homepage and you will be able to tell them we employ a younger than average team of staff. While many of these bright programmers have several years of qualifications and experience under their belts now, there was a time where they did not. Hiring new staff is a necessary but risky process on the path to successful business innovation. However for most young people fresh out of school/university they have minimal real-world experience to back them up leaving many employers very cautious to hire these graduates.
In response to this the government has introduced a new youth employee program designed to benefit businesses who hire younger staff. Business owners are reimbursed for offering work in the form of â€˜pseudo internships' to youth workers opening doors for not only the hopeful employee but also acting as a form of screening for the employer thus helping to mitigate the associated risks.
At working mouse we are already implementing an internship trial process for our new staff and have so far been seeing great results. We look forward to seeing how we can implement this new youth employee program to our process.
With the future framework set by the upcoming budget to go live on July 1st we at Working Mouse are waiting in anticipation to take full advantage of the new opportunities that will come about as a result.
Till then stay tuned.
For more on software innovation, see our performance at the RHoK hackathon.