Tax concessions for "Small Business Entities"

A small business with turnover of less than $2 million is eligible for a range of concessions. The new concessions for "small business entities" replaces the Simplified Tax System (STS).

Eligible businesses can pick and choose the concessions that best suit their needs, helping them to reduce red tape and compliance costs. In most cases, if you are currently using these concessions, these changes won’t affect your eligibility or how you continue to access them.

Small businesses with less than $2 million turnover may be eligible for the following concessions from 1 July 2007:

• choice to account for GST on a cash basis
• choice to pay GST by instalments
• annual apportionment of GST input tax credits
• simplified trading stock rules
• simpler depreciation rules
• entrepreneurs' tax offset
• CGT 15-year asset exemption
• CGT 50 per cent active asset reduction
• CGT retirement exemption
• CGT roll-over provisions
• PAYG instalments based on GDP-adjusted notional tax
• two-year period for amending assessments (exceptions may apply)
• immediate deductions for certain prepaid business expenses, and
• FBT car parking exemption (will apply from 1 April 2007).

Eligibility for some of these concessions will be dependent on satisfying some additional conditions. For more information on each concession affected by the change, see ‘What are the small business concessions?’

By D Maynard
CEO My Tax Zone