What is the threshold to access the various Small Business Tax Concessions?

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Since 1 July 2016, the tax concessions and reliefs available to small business entities have increased. If you find this information overwhelming, seeking assistance from a tax accountant can be highly beneficial. The thing you will notice about the concessions is that the thresholds, that you need to be below to access them, are different for each type of concession.

This can be unclear, remembering which threshold was relevant to which concession. Below we have provided a summary of each small business concession and the threshold that you will need to be below to access it.

Income threshold (aggregated turnover test)  Concessions/benefits

($50m from 30 June 2019)

This threshold applies to a company entity only, and it effectively reduces the income tax rate and franking credit rate down to 27.5% for the income year ended 30 June 2017 and 30 June 2018.

The income tax rate will progressively reduce to 25% by 30 June 2027.

$10m Simple depreciation rules include:

  • Immediate deduction in the first year for depreciable assets costs less than $20,000 (GST exclusive);
  • Places other depreciable assets into a 15% or 30% general business pool.

Prepaid expenses – immediate deduction for expenses paid in advance for up to 12 months (i.e. insurance, rent and subscriptions).

Start-up or formation costs – immediate deduction in the first year for these costs (i.e. legal and accountancy fees).

GST – Access to cash accounting for GST and payment of GST using the GST instalment method.

FBT exemption – can exempt car parking benefit to staff if used within the office premises.

Small Business restructure rollover relief allows small businesses to genuinely restructure the business without any capital gains tax consequences at the time of restructuring.

$5m Small Business tax offset is a non-refundable tax offset available to individuals carrying on a small business as a sole trader, beneficiary, or partner of a small business entity.

The current tax offset rate is 8% (capping at $1,000 for each individual).

$2m Small Business CGT Concessions including:

  • 15-year tax-free concession
  • Active asset 50% reduction
  • Retirement exemption ($ 500,000-lifetime cap)
  • Small business rollover

These concessions are complicated and have other conditions you need to satisfy to access them.

Please do not hesitate to contact us if you have any questions or would like to know more about the above tax concessions.

Kreston Stanley Williamson Team

*Correct as of November 2017

Disclaimer – Kreston Stanley Williamson has produced this article to serve its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas in this article, you must seek advice about your circumstances. Liability is limited by a scheme approved under professional standards legislation.

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