Tax cuts to benefit pharmacy: Guild


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Community pharmacy small businesses stand to benefit from cuts to company and personal income tax, an increased tax discount and instant equipment write-offs contained in tonight’s Budget, says the Guild in a special edition of Forefront.

From 1 July 2016, businesses with annual turnover less than $10 million will have a company tax rate of 27.5%. The company tax rate will be progressively lowered to 25% by 2026-27 for all companies.

It is thought that around 10% of community pharmacies operate through company structures, making them eligible for this company tax cut, says the Guild.

“The Government will also extend a range of concessions already available to small businesses with turnover less than $2 million to all businesses with turnover less than $10 million from 1 July 2016.

“Specifically, from 1 July 2016 the instant write-off for equipment purchases up to $20,000 will be available for businesses with turnover up to $10 million. This concession will expire on 30 June 2017.

“Recognising that not all small businesses are companies, the tax discount for unincorporated businesses will be increased from 5% to 8% for businesses with annual turnover less than $5 million, capped at $1,000.

“Around 2.3 million businesses will be eligible for this.

“The discount will be further increased in phases to reach 16% by 1 July 2026. The vast majority of community pharmacies will qualify under this turnover limit.”

The Government will also address “bracket creep” in personal income tax by preventing average full-time wage earners from moving into the second highest tax bracket until 2019-20, by increasing the 32.5% threshold from $80,000 to $87,000.

“According to the Government, this will stop around 500,000 taxpayers from moving into the 37% marginal tax rate,” the Guild says.

The National President of the Pharmacy Guild of Australia, George Tambassis, welcomed the tax changes for small businesses, saying many pharmacies would derive real benefit from them.

“In a tough trading environment it is pleasing to see the Government recognises the importance of maintaining the viability of small businesses such as community pharmacies,” he says.

“They employ thousands of Australians and deliver a crucial service within our health system.”

 

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