There are a variety of tax concessions available to a taxpayer that is carrying on a business which satisfies the eligibility criteria to be a ‘Small Business Entity’ (‘SBE’)
Broadly speaking, for the year ending 30 June 2017 a business taxpayer will be an SBE if its ‘aggregated turnover’ is less than $10,000,000. ‘Aggregated turnover’ takes into account the turnover of the entity carrying on the business and the turnover of its related parties.
It should be noted that although the turnover threshold to qualify as an SBE for the year ending 30 June 2017 is $10,000,000, for the purposes of accessing the CGT small business concessions, the aggregated turnover threshold is $2,000,000. However, a taxpayer with a turnover exceeding $2,000,000 can still claim the CGT small business concessions where they can satisfy the $6,000,000 maximum net asset value test.
For unincorporated entities wanting to access the small business income tax offset (also referred to as the SBITO) the aggregated turnover threshold for the year ending 30 June 2017 is $5,000,000.
For the year ending 30 June 2017, the tax concessions available to SBE taxpayers that satisfy the $10,000,000 threshold include:
- Access to the lower corporate tax rate of 27.5%;
- Access to the SBE simplified depreciation rules, including the ability of a business taxpayer to claim an immediate deduction for assets costing less than $20,000;
- Access to the simplified trading stock rules;
- Access to the small business restructure rollover relief;
- Access to deductions for certain prepaid business expenditure made in the 2017 income year and relating to good or services that are supplied in the 2018 income year;
- Ability to claim an immediate deduction for start-up expenses;
- The option to account for GST on a cash basis and pay GST instalments as calculated by the ATO;
- Access to the simplified method for paying PAYG instalments calculated by the ATO;
- Access to the FBT car parking exemption; and
- Expanded access to the FBT exemption for portable electronic devices.