Up to 720,000 incorporated small businesses will benefit from an early reduction in the company tax rate to 28 per cent, from from 30 per cent, from the 2012/13 financial year, the federal government confirmed.
The special treatment recognises some small businesses have been particularly hit hard by the impact of the global financial crisis, the government said in the 2010/11 budget papers released on Tuesday.
The measure will allow eligible small businesses to reinvest more of their profits to grow their operations, it said.
Larger entities will have to wait until 2013/14 for a one per cent reduction in the company tax rate to 29 per cent, and until the following financial year for a further one per cent cut to 28 per cent.
The measure will be funded by some of the receipts from the Resource Super Profits Tax (RSPT).
Talks continue between mining sector players and Treasurer Wayne Swan as the companies cling to hope the 40 per cent tax on super profits will be watered down or even abandoned altogether.
It's a big call, given Mr Swan reiterated in his budget speech that revenue from the tax will strengthen and broaden the whole economy, and boost national savings.
"It will also ensure our community charges a fairer price for our finite resources," Mr Swan said.
The government said reforms to resources taxation, combined with the cut in the company tax rate, was expected to lift gross domestic product by 0.7 per cent and increase after-tax real wages by 1.1 per cent over time.
"In current terms, this reform dividend is equivalent to an extra $450 per year in the pocket of a full-time worker on average weekly earnings."
The government will also allow small businesses to write-off assets valued at under $5,000 immediately, up from $1,000.
It will also allow small businesses to write-off all other assets, excluding buildings, in a single depreciation pool at a rate of 30 per cent.
"This measure will significantly simplify depreciation calculations, benefiting up to 2.4 million small businesses."
