As a boost for small businesses, the government will extend access to a number of small business tax concessions by increasing the annual turnover threshold from $2m to $10m. These measures will apply from 1 July 2016.
Under the announced measures, businesses with turnover below $10m will now be able to access a range of existing small business tax concessions, including:
Simplified depreciation rules, including the immediate tax deduction for assets costing less than $20k (up until 30 June 2017);
Simplified trading stock rules;
Simplified method for PAYG instalment payments;
The option to account for GST on a cash basis and apply the simplified method of GST instalments payments;
Immediate deduction for prepaid expenses;
Immediate deduction for professional expenses;
Fringe Benefits Tax concessions, including exemptions for work-related portable electronic devices (applicable from 1 April 2017).
The turnover threshold for access to the unincorporated small business tax offset for individuals will increase from $2m to $5m. The amount of the tax offset will also increase from 5% to 8% from 1 July 2016, and then increase incrementally to 16% over 10 years. However, the current cap of $1,000 per year will be retained.
The current $2m turnover threshold will be retained for access to the small business CGT concessions. Accordingly, to access these concessions, businesses will still need to meet this threshold or satisfy the maximum net asset value test of $6m.
These measures are very welcome. They expand the number of small businesses able to access the concessions, which provide immediate cash benefits and the reduction of compliance costs. With respect to the 1 July 2016 start date, small businesses may wish to time their expenditure accordingly.