What the 2016 Federal Budget means for Test and Taggers

May 2016

There’s been plenty of winners and losers from the 2016 Federal Budget, but there appears to be a few things to smile about for any test and tag business owners and sole traders. 

These positive changes mainly come in the form of both business and tax cuts, as explained by Treasurer Scott Morrison. If you are actively testing and tagging as a service provider, here’s what you need to know.

Tax cuts for small businesses

If you’re a small business owner, you’ll be pleased to hear that another tax cut is heading your way. In last years budget the government reduced the tax rate from 30 per cent to 28.5.

Now again, it’s going to be reduced by a further 1 per cent to 27.5 per cent this year.

Likewise, unincorporated businesses (i.e. test and tag sole traders) won’t be left in the dark either. They’ll see their tax discount increased from 5 per cent to 8 per cent from July 1, which is capped at $1000. This will continue all the way to July 1, 2026, where it will reach a final rate of 16 per cent.

You’ll remember last year the government introduced instant tax reductions for any business equipment under $20,000. This was especially useful for buying a new portable appliance tester or any additional PAT equipment and accessories. 

This has remained intact and will expire as of June 30, 2017, so we suggest you make the most of it while you can.

People earning about $80,000 a year

For people who test and tag and earn over $80,000 a year – they’ll now be given a tax cut on their personal income.

This will be achieved by increasing the upper limit for the middle tax bracket from $80,000 to $87,000. While someone would have previously been taxed at 37 per cent, it now means they’ll remain at 32.5 per cent. 

In other words, this effectively allows a saving of up to $315 every year for people in this tier. 

What’s my next step?

There’s a difference between knowing about the changes and knowing what to do about it.

Research previously conducted by Accounting firm H&R Block suggested that only 32 per cent of businesses were utilising the $20,000 equipment write-off to its fullest potential. It is for this reason that we highly suggest you speak to your accountant on how you can take advantage of these changes.