Increase in small business entity threshold
The Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016 changes the thresholds for small business entities.
Concessions with a $10 million threshold
The aggregated turnover threshold for a small business entity will increase to $10 million for the following concessions:
• Small business depreciation rules;
• Cash accounting for GST;
• Paying GST by quarterly instalments;
• Immediate deduction for small business start-up expenses;
• Prepayment rules; • Simplified trading stock provisions;
• FBT car parking exemption;
• PAYG Instalments based on GDP-adjusted notional tax.
The Company tax rate for small business entities will be reduced to 27.5% for the 2017 income year (from 28.5% in the 2016 income year).For the 2017 and later income years, the maximum franking credit that can be allocated to a distribution will be based on a tax rate of 27.5%.
$5 million threshold for the small business tax offset
The small business tax offset (for unincorporated businesses) will be available for entities with an aggregated turnover of less than $5 million.For the 2017 to 2024 income years, the rate of the tax offset for unincorporated businesses will change to 8% of the tax on small business income (subject to a maximum tax offset of $1,000).
$2 million threshold for the small business CGT concessions
The threshold for the small business CGT concessions is unchanged.
To be eligible for the small business CGT concessions, the entity must satisfy one of the following conditions (in addition to satisfying other conditions):
• The entity satisfies the maximum net asset value test ($6 million asset test); or
• The entity is a “CGT small business entity” with an aggregated turnover of less than $2 million.
Brain Partners is a boutique firm of Chartered Accountants and Registered Tax Agent, where you receive the personal attention of the founding partners, Fergus and Melissa Brain. Fergus and Melissa are both qualified accountants with a background in public practice and commercial finance roles. We are based in Kenthurst with a city presence at Allen Legal in Surry Hills.
Please do not hesitate to contact us should you require further clarification in relation to the aforementioned matters: [email protected], 02 9654 2295 / 0448 448 366