A Little On Small Business Tax Concessions
Small Business Tax Concessions
To be considered a small business entity the aggregated annual turnover (sales) must be less than $2 million. Prior to 1 July 2007 the small business concessions were contained within a package of measures called the Simplified Tax System (STS). If you were previously in STS you can continue to use those measures, but you do not have to adopt them as a package you can pick and choose the concessions that best help your business.
The main features are:
• The availability of an entrepreneurs tax offset.
• A simplified and more generous depreciation system (capital allowances):-
- Depreciating assets that cost less than $1,000 each can be written off immediately and claimed as a deduction in the year in which you started to use the asset, or installed it ready for use, for a taxable purpose.
- Other depreciating assets which have an effective life of less than 25 years are pooled and depreciated at the diminishing value rate of 30%.
- Depreciating assets with an effective life of 25 years or more are pooled and depreciated at the diminishing value rate of 5%.
• A simplified treatment of trading stock. Taxpayers are only be required to account for changes in their trading stock on hand or do stock takes at the end of the year where the difference between the value of opening stock and your reasonable estimate of closing stock exceeds $5000.
• An immediate deduction for prepaid expenses.