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2016/17 tax year – tax changes for small business

Posted by Northadvisory on June 7, 2017

As 30 June 2017 is fast approaching, we would like to advise of some key tax changes that your business may be in a position to take advantage of before the end of the financial year.

Change in thresholds for small businesses

During the year, the aggregated turnover threshold for small business entities was changed from $2m to $10m. For your business, the following changes can apply to your income tax calculation:

• the lower small business corporate tax rate (27.5% for the 2016/17 tax year)
• immediate deductibility for small business start-up expenses
• simplified depreciation rules (low value pools), including the instant asset write off threshold of $20,000 available until 30 June 2017
• simplified trading stock rules
• option to account for GST on cash basis and pay GST by instalments
• simplified method of paying PAYG instalments calculated by the ATO, and
• other tax concessions such as the extension of the FBT exemption for work-related portable electronic devices from 1 April 2016.

The increased $10m threshold will not be applicable for accessing the small business capital gains tax concessions.

Franked dividends

The imputation system for corporate tax entities will now be based on the company’s corporate tax rate for a particular income year. This is worked out in regard to the entity’s aggregated turnover for the previous income year.

Therefore, with the change in the definition of small business above, an entity with between $2m and $10m in the 2015/16 income year can fully frank a distribution based on the tax rate of 27.5%.

Simpler BAS

Small businesses will have a simpler BAS after 1 July 2017. After this date, a small business (under $10m) will only need to report the following on a BAS:

• GST on sales (1A)
• GST on purchases (1B), and
• Total sales (G1).

If you have any concerns about how these changes will affect you, or about other matters relating to your tax, please do not hesitate to contact our office.

Martin van der Saag
Director
T: 02 9984 7774
E: martinv@northadvisory.com.au

 

Norman Ruan
Accountant
T: 02 9984 7774
E: normanr@northadvisory.com.au