Business Tax Tips – Small Business Concessions Point Cook
Small Businesses with an annual turnover of less than $2 million may be eligible to access a range of tax concessions. This applies whether you operate your business as a sole trader, partnership, company or trust. All our highly qualified Accountants at MAS Tax Point Cook are very experienced with helping Small Business ensure they are claiming ALL the tax concessions they are entitled to. Providing Tax and Accounting services to the Point Cook, Hoppers Crossing and surrounding areas. Small Business Defined – if you carry on a business and your aggregated business turnover is less than $2 million then yours would be considered a small business and may be eligible for tax concessions. However, there are aggregation rules that determine whether you need to include the turnover of another entity in your aggregated turnover. You satisfy the turnover test for the current year if your aggregated turnover:
- Was less than $2 million in the previous income year
- Is estimated to be less than $2 million for the current year (provided that your aggregated turnover was less than $2 million for one of the two previous income years), or
- Is actually less than $2 million at the end of the current year.
Eligibility One generally qualifies for the small business entity concessions if your business is considered a ‘small business entity’ for the year in question. However, some of the concessions have additional conditions which you will also need to meet. At MAS Tax Point Cook we can walk you through the assessment process for the concessions and make sure your business is taking advantage of all the tax concessions it is eligible for. Examples of just some of the concessions available to Small Businesses are as follows: Type 1 Income Tax Concession
- Simplified Trading Stock Rules – One can choose whether or not to do an end-of-year stocktake and account for changes in the value of trading stock, if the value of your trading stock has not increased or decreased by more than $5,000 over the year.
- Simplified depreciation rules – One can generally pool your assets to make depreciation calculations easier and also claim an immediate deduction for most assets each costing less than $6,500 in 2012-13 onwards.
- Immediate deductions for prepaid expenses – You can claim an immediate deduction for prepaid expenses where the payment covers a period of 12 months or less that ends in the next income year.
- Year Two amendment period – You generally have a two-year time limit (from the day that the Commissioner issued your notice of assessment) for reviewing an assessment.
Type 2 Excise Concession
- If you are an eligible Small Business, you can apply to defer settlement of your excise duty and excise-equivalent customs duty from a weekly to a monthly reporting cycle. If approved, you can then lodge your return and pay your duty liability on or before the 21st day of the following month.
Type 3 Capital Gain Tax (CGT) Concession
- CGT 15-year asset exemption – If you are aged 55 or older and retiring or are permanently incapacitated, and your business has owned an asset for at least 15 years, you won’t pay CGT when you sell the asset.
- CGT 50% active asset reduction – If you’ve owned an asset to conduct your business (an ‘active asset’) you’ll only pay tax on 50% of the capital gain when you sell the asset.
- CGT retirement exemption – There is CGT exemption on the sale of a business asset, up to a lifetime limit of $500,000. If you are under 55, money from the sale of the asset must be paid into a complying superannuation fund or a retirement savings account.
- CGT rollover – If you sell a small business asset and buy a replacement asset or improve an existing one, you can defer your capital gain until a later year.
Type 4 GST Concession
There are three goods and services tax (GST) concessions that you may be eligible for:
- Accounting for goods and services tax (GST) on a cash basis – You can account for the GST you must pay on sales you make in the same tax period you receive payment for them. Accordingly, you would claim GST credits for the GST you pay in the price of your business purchases in the same tax period that you pay for them.
- Paying GST by instalments – You can pay GST by instalments worked out for you by the ATO. You can vary this amount each quarter if you choose.
- Annual apportionment of GST input tax credits – If you purchase items that you use partly for private purposes, you can choose to claim full GST credits for these items on your activity statements and then make a single adjustment to account for the private use percentage after the end of your income year.
Type 5 PAYG Instalment Concession
- If you report and pay PAYG instalments quarterly, you can choose to pay instalment amounts we work out for you. The amount we work out is printed on your quarterly activity statement
Type 6 FBT Concession
- You may be exempt from fringe benefits tax (FBT) on car parking benefits you provide.
Don’t hesitate to contact us today at MAS Tax Point Cook to find out how we can make sure your Small Business takes advantage of ALL the available concessions before the end of the financial year, as well as ensure you and your business remain in the best possible financial position all year round.
For more information or to make an appointment, please contact us below or call (03) 8742 7286
