Small businesses can access a range of concessions including payment and reporting options. This applies to sole traders, partnerships, companies or trusts. To work out if you are eligible for small business entity concessions, you first need to work out if you are a small business entity in an income year. You must review your eligibility each year. You’re a small business if you are a sole trader, partnership, company or trust that does both of the following:
- operates a business for all or part of the income year
- has less than $2 million aggregated turnover
Your aggregated turnover is your gross income or proceeds (rather than your net profit) for an income year. When working this out:
- include the annual turnover of any entity you are connected with or that is an affiliate of yours at any time during that income year
- exclude any goods and services tax (GST) amounts you have charged on your Sales.
As a small business, you can access a range of concessions. Simplified Trading Stock Rules allow you to estimate the value of your trading stock at the end of the financial year to report in your tax return. You will need to record how you estimated the value of your stock.
From 12 My 2015, primary producers can immediately deduct the costs of fencing, water facility and the cost of fodder storage assets over three years. The range of deductible start- up costs includes professional, legal and accounting advise and government fees and charges.
From 1 July 2016, small businesses can 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.
From the 2015–16 income 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
- a share of net small business income from a partnership or trust less any deductions attributable to your share.
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.