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Tax Breaks for Small Business

Below are the key tax concessions for self-employed, small business people for the 2018 financial year. The information is a simplified version from the

Make sure you discuss these tax options with your accountant so that they can provide you with the correct advice.

1. Small business companies - Lower tax rate

The following tax rates apply if you are a small business person using a company structure.

  • 2015–16          28.5%  turnover less than $2m.
  • 2016–17          27.5%   turnover less than $10m.
  • 2017–18          27.5%   turnover less than $25m

2. Small business individuals/partnerships - Tax discount

The following discounts apply if you are a small business person not using a company structure. That is, you are a sole trader or partnership.

  • 2016–17      8% tax discount on business income     turnover less than $5m.
  • Discount will increase until it is 16% in 2026–27.
  • Max discount is $1,000 per individual each year.

3. Capital gains tax (CGT) concessions

The following apply if your net business assets are no more than $6m or annual turnover is less than $2m:

  • CGT exemption on active small business assets held continuously for 15 years where you are permanently incapacitated or reach 55 years and retire.
  • 50% additional capital gains reduction when you sell active small business assets.
  • $500,000 lifetime capital gains exemption when you sell your small business and use the money for retirement.
  • CGT roll-over where you sell one small business and use the money to buy another small business.

4. Instant asset write-off and simplified depreciation rules (ATO link)

$10m or less turnover have additional depreciation arrangements. You can immediately deduct assets that cost less than a certain amount:

  • $20,000      From May 2015–June 2018. (To be extended to June 2019)
  • $1,000       After 1 July 2019.

Plus extra depreciation available through simplified pooling arrangements (15% first year, then 30%).

5. Refundable R&D tax

2018-19 Budget intends the following:

  • Company turnover below $20 million.
  • Tax R&D rebate to be 13.5% above your company tax rate.
  • Cash refunds max $4 million a year.
  • Above the refund limit, tax offsets can apply to future years.

6. Restructure roll-over relief

If you change the structure of your small business:

  • Capital gain and income tax ‘roll-over relief’ is available.
  • Must be for a ‘genuine restructure’ where ownership is unchanged.
  • Turnover must be less than $10m.

7. Immediate deduction for professional expenses

If you start a new business, professional expenses such as legal and accounting are an immediate tax deduction. (Previously could only deduct over 5 years). Turnover less than $10m.

8. Simplified trading stock rules

If the difference between your stock at the beginning of the year and end of year is less than $5000, you can choose not to record this in your tax return. Turnover less than $10m.

9. PAYG: Instalments based on GDP-adjusted notional tax

You can have your pay-as-you-go instalments calculated for you by the ATO.

10. Two-year amendment period

The period in which your tax can be amended will generally be 2 years instead of 4 years.

11. Fringe benefits tax; employee car parking (ATO link: General issue cars)

Car parking for your employees exempt from fringe benefits tax.

  • But not for parking in a commercial car park.
  • Employer’s total income less than $10m.

12. Fringe benefits tax; portable electronic devices

FBT exemption for multiple work-related portable electronic devices provided to employees.

  • Use must be mainly work-related.
  • Applied from 1 April 2016.

13. GST (ATO link: General issue GST)

You do not have to register for GST if your turnover is less than $75,000.

  • BUT taxi and limousine services must register whatever their turnover.

GST concessions available including the option to:

  • Use cash accounting.
  • Pay GST by quarterly instalments and to lodge an annual return.
  • Lodge a simplified business activity statement to report GST.
  • Apportion GST input tax credits on an annual basis for acquisitions and importations that are partly creditable.

14. Employee superannuation clearing house

A free superannuation clearing house service is available where:

  • Turnover less than $10m or
  • 19 or fewer employees.

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