Are you maximising your tax benefits from your small business concessions?

Small businesses are described as the backbone of the Australian economy – making up 96 per cent of the Australian economy, employing over 4.5 million people and producing $330 billion of Australia’s economic output per year.

The Government has finally reduced the red tape burden for small businesses, providing certain concessions for those who qualify as a small business entity (“SBE”).

As it stands, the main requirement to qualify as a SBE is for aggregated business turnover to be $2 million or less. However, the current proposed changes contained in the Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016 (currently before the House of Representatives), proposes to increase the threshold from $2 million to $10 million – qualifying a substantial new set of businesses for the small business regime.

So, what does this really mean? How can I save tax with these small business concessions?

Listed below are 6 of the 12 concessions that can potentially save you thousands in tax, helping you better put your money towards your personal wealth creation!

  1. Reduced company tax rate

The corporate tax rate for companies that are SBEs was reduced from 30 per cent to 28.5 per cent from 1 July 2015. The (Enterprise Tax Plan) Bill 2016 proposes to further reduce the corporate tax rate to 27.5 per cent from 1 July 2017 for all companies that qualify as SBEs.

  1. Immediate write-off of assets

The ATO allows an immediate write-off of assets costing $20,000 or less up until the year ended 30 June 2017 for SBEs. This will be reduced to $1,000 from 1 July 2017 – which means it could be great time to consider the upgrades that you keep putting off!

This also applies to current small business pooled assets with a balance of less than $20,000.

  1. Capital gains tax concessions

The ATO provide 4 small business capital gain concessions that can potentially save you tens of thousands of income tax. These concessions allow you to either disregard, defer or discount the capital gain made on your asset, providing substantial tax free proceeds for you to further invest.

This is only applicable to ‘active assets’ which means, the asset must be used in the course of carrying on a business.

  1. Fringe benefit tax exemption for multiple electronic devices

Portable electronic devices provided to employees that are primarily used for work purposes such as mobile phones, PDAs, laptops and GPS devices are now exempt from Fringe Benefits Tax (FBT). The exemption is limited to one of each listed item per employee per year.

  1. Fringe benefit tax car parking exemption

If you provide car parking benefits to your employees, these benefits will be exempt from FBT if your total revenue does not exceed $10 million and the car is not parked at a commercial parking station[1].

  1. Small business income tax offset

If you are a sole trader or a beneficiary of a trust that is a SBE, you will be eligible for 5% tax offset – capped at $1,000. This is proposed to increase to $5,000 once the Enterprise Tax Bill is passed.

Of course, there are more…

The above is not an exhaustive list of small business concessions available. There are further concessions that can not only reduce the tax you pay but also your annual accounting compliance costs.

Experts in small business

We look after hundreds of small businesses to help them maximise their taxation benefits, providing them with more cash for their wealth creation. Therefore, if you need help, please do not hesitate to reach out to us for a complimentary discussion.


[1] A commercial car parking station does not include car parking facilities, with a primary purpose other than providing all-day parking, that usually charge penalty rates significantly higher than the rates chargeable for all-day parking at commercial all-day parking facilities (such as parking provided for short term shoppers or hotel guests).