Small business entity concessions

Small businesses with an annual turnover of less than $2 million may be able to access a range of tax concessions. This is applicable whether you operate your business as a sole trader, partnership, company or trust. To qualify, you will need to check if you business is eligble for the tax concession.

Eligible businesses can use the concessions outlined below:

CGT 15-Year Asset Exemption
If you are aged 55 or older and retiring or are permanently incapacitated, and you have owned an active business asset for at least 15 years, you won’t pay capital gains when you dispose of the asset by sale, gift or transfer.

CGT 50% Active Asset Reduction
If you have owned an active business asset you’ll only pay tax on 50% of the capital gain when you dispose the asset.

CGT Retirement Exemption
There is a CGT exemption on the sale of an active business asset, up to a lifetime limit of $500,000. If you are under 55, money from the disposal of the asset must be paid into a complying superannuation fund or a retirement savings account.

CGT Rollover
If you dispose of an active business asset and buy a replacement asset or improve an existing on, you can defer your capital gain unit a later year.

Simplified Depreciation Rules

  • Immediately write-off most depreciating assets costing less than the threshold amount ($20,000 for assets purchased on 12 May 2015 until 30 June 2017).
  • Pool most other depreciating assets in the general small pool business pool and depreciate at the dimishing value rate of 30%.
  • Depreciate most newly acquired assets at 15% in the first year, regardless of when they were acquired in the year.

Simplified Trading Stock Rules
Estimate the value of your trading stock at the end of the financial year to report in your Income Tax Return. How you estimate the value of your stock needs to be recorded. If the value of your trading stock has not increased or decreased by more than $5,000 over the year, you can choose whether or not to do an end of year stock take.

Immediate Deductions for Prepaid Expenses
Claim an immediate deduction for prepaid expenses where the payment covers a period of 12 months or less that ends in the next income year.

Two-Year Amendment Period
You have a two-year time limit for the Commissioner or taxpayer to amend an income tax assessment, rather than the standard 4 years.

PAYG Instalment Concessions
If you report and pay PAYG Instalments quarterly, you can choose to pay instalment amounts the Australian Taxation Office (ATO) works out for you.

Accounting for GST on a Cash Basis
Account for the GST you must pay on sales in the same tax period you receive payment for them. Accordingly, you would claim GST credits for the GST you pay in the price of your business purchases in the same tax period.

Paying GST by Instalments
Pay GST by instalments worked out by the ATO and vary this amount each quarter if desired.

Annual Apportionment of GST Input Tax Credits
If an item is purchased for private use, you can choose to claim full GST credits for these items on your activity statements and make a single adjustment to account for the private use percentage after the end of your income year.

Excise Concession
You can apply to defer settlement of your excise duty and excise-equivalent customs duty from a weekly reporting cycle to monthly. Only for eligible small businesses.

FBT Concession (Car Parking)
Car parking benefits you provide as a small business emplyer are exempt if certain conditions are satisfied.