Tuesday’s Federal Budget unveiled some great bonuses for small business in the form of a series of tax concessions. And the good news is that the government has considered the high turnover – low margin nature of fuel retailing businesses, which means our business is excluded from the $2m turnover cap.

In announcing the Budget, Federal Treasurer Joe Hockey stated that a key objective of the Budget was to get Australia moving again and encourage all Australians to ‘get out there and have a go’.

And as part of this, a major element was the provision of $5B for the small business sector in Australia, comprising $3.25B in tax cuts and $1.75B in accelerated depreciation measures.

The Federal Minister for Small Business, Bruce Billson, said the Budget included “the biggest small business initiative in our nation’s history”.

“Small businesses are the engine room of our economy. As our economy changes, the role of our small businesses will be even more important,” Minister Billson said.

“At the heart of the Growing Jobs and Small Business Package are tax cuts for over 2 million Australian small businesses to help drive investment and employment across our economy.

Key features of the Growing Jobs and Small Business Package include:

  • Reduction in the company tax rate for businesses with annual turnover up to $2 million by 1.5 percentage points to 28.5 per cent – commencing 1 July 2015
  • Provision of a 5 per cent tax discount for sole traders, trusts and partnership structures which are unincorporated businesses with annual turnover up to $2 million ( capped at $1,000, through their end of year tax return). This measure also takes effect from 1 July 2015
  • Provision of depreciation measures that will allow small businesses with turnover below $2 million to fully and immediately deduct every asset they acquire that is valued up to $20,000 for tax purposes – a substantial increase from the previous $1,000 threshold. This measure is effective immediately and will apply until 30 June 2017

“The small business concessions announced in Tuesday’s Budget are impressive by any measure,” ACAPMA CEO Mark McKenzie said.

“But the big news for us is the fact that the government has considered the specific nature of our industry in setting out the eligibility requirements for these concessions for small fuel retailing businesses.”

Small fuel retail businesses would usually not qualify for these measures because fuel retail sales alone typically exceed the $2M annual turnover threshold that defines a ‘small business’ – despite the fact that the low margin nature of these businesses means that the business owner captures very little of this revenue as profit.

But closer analysis of the budget reveals that the Federal Government – and Minister Billson in particular – has considered the specific needs of the fuel retail industry by excluding retail fuel sales from the calculation of annual turnover.

In fact, Australian Tax Office guidance about how to calculate annual turnover for the purposes of determining whether your business Is eligible for the new measures includes the following specific guidance:

Do not include retail fuel sales when working out your turnover. This is a special rule because sales of retail fuel are characteristically high in sales volume with low profit margins.

For the very first time, we have a government that understands the high turnover small margin nature of our industry and has advanced a series of measures that will benefit small fuel retailing businesses around Australia,” Mark said

“Minister Billson and Treasurer Hockey have delivered a package that will deliver tangible benefits to our industry at a time when both our industry and the broader Australian economy is toughing it out.

“We welcome the new small business measures announced in the Budget on Tuesday night and ACAPMA unreservedly congratulates the government on the delivery of a comprehensive and well-constructed package of measures for small business in Australia.”

Owners of fuel retail businesses are encouraged to speak with their accountant about how they can best take advantage of the new small business measures announced by the Abbott Government this week.

Further information about small business eligibility can be found by visiting the Australian Taxation Office website at https://www.ato.gov.au/Business/Small-business-entity-concessions/In-detail/Eligibility/Am-I-eligible-for-the-small-business-entity-concessions-/?anchor=H5#H5)