Small Business – Big Tax Concessions

Did you know there are tax concessions available that can help your small business grow? Find out which ones you can use and when they start, so you can benefit. 

Some concessions for small businesses include:
1. Instant write-off for each asset costing less than $20,000
Small businesses can immediately deduct the business portion of most assets if they cost less than $20,000 and were purchased between 7:30pm on 12th May 2015 and 30th June 2017. This deduction can be used for each asset that costs less than $20,000, whether new or second-hand. You claim the deduction through your tax return, in the year
the asset was first used or installed ready for use.

2. Immediate deduction of professional expenses for starting your business
From 1st July 2015, small businesses are entitled to certain deductions when starting up a small business. The range of deductible start-up costs includes professional, legal and accounting advice and government fees and charges.

3. Tax discount of 5% (up to $1,000) for unincorporated small businesses 
From the 2015–16 financial year, an individual is entitled to a tax offset on the tax payable on the portion of their income that is from:
• net small business income from sole trading activities
• share of net small business income from a partnership or trust.

The income tax offset can reduce the tax payable that relates to the individual’s small business income by 5% up to $1,000 each year. The ATO will work out the offset based on the total net small business income reported in your income tax return.

4. A 1.5% cut to the small business company tax rate
For income years commencing on or after 1st July 2015, the small business company tax rate has been reduced from 30% to 28.5%. The maximum franking credit that can be allocated to a frankable distribution is unchanged at 30%, even if a small business is eligible for the 28.5% tax rate.

5. No fringe benefits tax for providing multiple electronic devices to employees
From 1st April 2016 small businesses will not incur a fringe benefits tax (FBT) liability if they provide their employees multiple work-related portable electronic devices that have similar functions. These include devices that are primarily used for work, such as laptops, tablets, calculators, GPS navigation receivers and mobile phones. This benefit may be in addition to, or part of, the employee’s salary or wages package.

6. No income tax liability for asset roll-overs when restructuring your business 
From 1st July 2016, small businesses will be able to change the legal structure of their business without incurring any income tax liability when active assets are transferred by one entity to another. This rollover applies to active assets that are CGT assets, trading stock, revenue assets and depreciating assets used, or held ready for use, in the course of carrying on a business.

7. Accelerated depreciation for primary producers
From 12th May 2015, changes allow primary producers to immediately deduct capital expenditure on fencing and water facilities such as dams, tanks, bores, irrigation channels, pumps, water towers and windmills.

You can qualify for the first six concessions if your small business has a total turnover of less than $2 million either in the year you use the concession or the year before that. All primary producers can access accelerated depreciation regardless of turnover.

In the recent Budget announcement there is a proposal that from 1st July 2016, the definition of a small business will be extended to businesses with a turnover of less than $10 million. This will then enable access to the concessions available to businesses that fall within this definition, including a lower rate of company tax and simplified depreciation rules. However, for purposes of accessing the small business capital gains tax concessions, the current turnover threshold of $2 million will be retained.