Date: 12 April 2017
The Federal Government's Enterprise Tax Plan will deliver immediate and tangible benefits to Australia's 5,600 community pharmacy small businesses.
This tax relief is recognition of the vital role of these small businesses in their communities, employing local staff and meeting the health needs of their patients.
In particular, the cut to the small business tax rate will benefit all pharmacies with turnovers up to $10 million a year. The median community pharmacy turnover is around $3 million a year.
Many community pharmacies are unincorporated. For these small businesses with turnover up to $5 million, the tax discount on unincorporated business income will be raised from 5 per cent to 8 per cent with a cap of $1,000 per individual. This means unincorporated small businesses will not miss out on the benefits of the small business tax cuts.
The increase in the turnover threshold definition for small businesses from $2 million to $10 million means more community pharmacies will benefit from a range of tax and related benefits that apply to small businesses.
This includes the simplified depreciation arrangements, which include immediate tax deductibility of asset purchases up to $20,000 before 30 June 2017.
Under the current system, the deductibility will revert to $1,000 a year at the start of the 2017-18 financial year. However, the Guild is working closely with the Minister for Small Business, Michael McCormack, to have the $20,000 deductibility extended.
These tax changes will be welcomed by community pharmacies in a difficult trading environment.
Currently, pharmacies are facing the triple whammy of heavy discounting, major reductions in PBS medicine prices, and flat prescription volumes.
While the Government’s tax package is welcome news across the whole small business sector, the Pharmacy Guild is also heartened by the approach the Government and the Minister for Health, Greg Hunt, have brought to pharmacy sector issues in recent weeks.
The Minister’s strong intervention in the codeine MedsASSIST issue was an unambiguous recognition of the important role of community pharmacy in dealing with pain relief and addiction issues. Minister Hunt made clear to the Guild’s leadership that he is committed to working in partnership with the Guild to keep MedsASSIST operating in the interest of patient safety – a commitment we acknowledge and welcome.
Contact: David Quilty