Small business is the backbone of our economy and the Morrison government is in no doubt continuing to support small and medium sized businesses through COVID – 19 by providing further support for SME as part of our economic recovery plan.

In addition to the extensive support provided for small and medium sized businesses  including JobKeeper, extending the Asset Write off, cashflow boost and boosting capital through the SME loan guarantee scheme, they have also as part of the 2020-21 budget expanded certain small business concession to include entities with aggregate turnover less than $50M ( previously $10M).  

What types of concessions will be available?

Prior to 30 June 2020 small business tax concessions were available for businesses with aggregated turnover of less than $10m.

Existing small business tax concessions includes:

• Simplified depreciation and instant asset write -off
• Accelerated depreciation
• Deductions for professional expenses for start-ups
• Simplified trading stocks rules
• Immediate deduction for prepaid expense
• Two years amendment periods
• Increased small business income tax offset
• PAYG instalment concessions
• Simplified BAS
• Small business restructure rollovers

For the first time businesses with aggregated annual turnover between $10M and $50M will have access to up to 10 small business tax concessions as listed above.

The expanded concessions will however be rolled out in three phases as follow:

• From 1 July 2020, eligible businesses will be able to immediately deduct start-up expenses and certain prepaid expenditures,
• From 1 April 2021. Eligible businesses will be exempt from FBT on car parking and multiple work related portable electronic devices eg. phones and laptops provided to employees,
• From 1 July 2021, access to simplified trading stock rules, remit PAYG instalments based on GDP adjusted notional tax and settle excise duty and excise-equivalent customs duty monthly on eligible goods. Furthermore, eligible businesses will also have a 2 year amendment period (previously 4 years) apply to income tax assessments for income years starting from 1 July 2021.

In addition, from 1 July 2021 the commissioner of taxation’s power to create a simplified accounting method determination for GST purposes will be expanded to apply to businesses below the $50M turnover threshold.

The good news is that the expansion will provide additional support to around 20,000 businesses and employees to assist in supporting jobs and further sustain the economy during this difficult time.

Small Business Depreciation

• From 6 October 2020 all businesses will be able to immediately write off the full value of new assets that is used or installed before 30 June 2022.
• Businesses with annual turnover of less than $50M will be able to claim full deductions for the cost of all second-hand assets used and installed before 30 June 2022.
• Businesses with annual turnover between $50M and $500M  will be able to claim a full deduction for second hand assets of up to $150K under the existing scheme if they are purchased by 31 December 2020 and used or installed by 30 June 2021.

We will enlighten you as further information is released on these measures. In the meantime, if you have any queries regarding this announcement and the opportunities it may provide to assist your business, please do not hesitate to contact our office.

Written for you by Emelia Afful