The Australian Taxation Office has a range of concessions available to small business entities and these apply to sole traders, partnerships, companies and trusts.

To be eligible for these concessions you need to operate a business for all or part of the income year and have an aggregated turnover of less than $10 million.  Previously this turnover was $2 million.  The recent change means that from 1st July 2016, more businesses are now eligible for most small business tax concessions.

Some of the income tax concessions available to small businesses are listed below.

  • Your business can immediately deduct the business portion of most assets that cost less than $20,000 each purchased up until 30th June 2018 (new or second-hand assets).
  • Assets costing $20,000 or more are placed in the small business simplified depreciation pool (‘the pool’) and depreciated at 15% in the first year (not pro-rata from the date of purchase) and 30% in subsequent years.
  • If the opening balance of your ‘general pool’ falls below $20,000 you are eligible for an immediate tax deduction.
  • Small business income tax offset available to sole traders or individuals who have a share of net small business income from a partnership or trust.
  • You can claim an immediate deduction for prepaid expenses where the payment covers a period of 12 months or less that extends into the next income year.
  • Eligible for the reduced company tax rate of 27.5%.
  • Simplified trading stock rules.
  • Certain start-up costs, such as legal and accounting fees, become immediately deductible.

There are a number of other small business entity concessions, such as:

  • CGT concessions
  • PAYG instalment concessions
  • Fringe benefits tax (FBT) concessions
  • Superannuation concessions
  • GST and excise concessions

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