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Small Business Tax Concessions

written by Josh McMullen


On 9 May, the Government passed through Parliament legislation to assist small to medium businesses. While business tax cuts were the headline measure, included in the changes was an increase to the Small Business Entity (SBE) turnover threshold. Backdated to 1 July 2016, the SBE turnover threshold has been increased from $2 million to $10 million (including the turnover of any connected entities and affiliates).

Treasury estimates that this will allow an additional 90,000 to 100,000 businesses to qualify for a range of SBE concessions. Even if your business already qualified for the concessions (i.e. it has a turnover of less than $2 million) this post provides a handy refresher as to whether your business is taking full advantage of the SBE concessions on offer.

$20,000 SMALL BUSINESS ASSET WRITE-OFF

In good news for business, in the recent Federal Budget, the $20,000 Instant Write-Off was extended until 30 June 2018.  Previously, the concession was due to be abolished on 30 June 2017. In a nutshell, this concession provides SBEs with the ability to claim a 100% deduction for most asset purchases in the year they are first used or installed ready for use (as opposed to making a depreciation claim over the course of many years).

Now businesses with a turnover of less than $10 million can claim an immediate write-off under this concession. To claim a deduction in 2016/2017, the asset must be first used or installed ready for use in your business on or before 30 June 2017.  If you miss the deadline, then the Write-Off cannot be claimed until 2017/2018.

Aside from the asset write-off, other SBE tax concessions available include:

INCOME TAX

  • Business Start-Up Expenses – An immediate deduction in the year of expenditure for certain start-up expenses (rather than deductions being drawn out over five years)
  • Simplified Trading Stock Rules – The ability to bypass the annual year-end stock-take (which many businesses find time-consuming) in certain circumstances
  • Immediate Deductions for Prepaid Expenses – Claim the full amount of certain prepaid business expenditure current income year rather than over two income years. This assists cash-flow.
  • Accelerated Depreciation for Primary Producers –Deductions for fencing, water facility, and fodder storage can be significantly fast-tracked.
  • Change Your Business Structure Tax-Free – This measure provides more opportunities for SBEs to change their operating structure (e.g. from a sole trader to a trust) without incurring capital gains tax or other income tax liabilities.

GST

  • Simpler BAS – Your business may now be eligible to complete a simplified Business Activity Statement (BAS). Only three BAS labels may now be required to be completed.
  • Account on a Cash Basis – Simplify your GST accounting and assist cash-flow
  • Simplify ATO GST Payments – Take the time out of calculating your GST instalment payments to the ATO, by having the ATO work out the amounts for you.

FBT

  • Car-Parking Benefits – Subject to various conditions, SBE employers can provide car-parking benefits to employees without incurring FBT
  • Portable Electronic Devices – Provide multiple (and much-appreciated) portable electronic devices such as laptops, Smartphones etc. to employees in the same FBT year, without incurring FBT.

MORE INFORMATION

If you wish to explore these small business concessions further, please contact your PT Partners advisor on (07) 3808 4499.

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