Is my business a small business entity?
Small businesses face different challenges and adverse market conditions to large scale corporations and entities. The Australian Taxation Office has several tax related concessions which small businesses can access if they are eligible. Businesses which can access these concessions are called ‘Small Business Entities’.
Here are the boxes your business will need to tick in order to be considered a Small Business Entity:
Has your business been in operation for the whole or part of the income year?
Is your aggregate turnover less than the turnover threshold?
Whether your business passes the aggregate turnover threshold test depends on the specific concession you are attempting to access.
Since 1 July 2016 for most concessions, the turnover threshold is $10,000,000. However, there are concessions with lower turnover thresholds.
For example: The Small Business Income Tax Offset turnover threshold is $5,000,000 and concessions relating to Capital Gains is $2,000,000.
There are many tax concessions available to small businesses which pass the above tests. It is important to note that each has their own conditions which need to be met in order for them to be claimed.
Available concessions include:
$20,000 instant asset write-off
Deductions for professional services on startups
Immediate deduction for prepaid expenses
Lower company tax rate
Accounting for GST on a cash basis
A full summary of available concessions, the aggregate turnover threshold, and specific conditions can be found on the ATO’s website: https://www.ato.gov.au/Business/Small-business-entity-concessions/Concessions/Concessions-at-a-glance/