Small business turnover threshold to increase to $10m
The small business entity turnover threshold will be increased from $2m to $10m from 1 July 2016. The increased threshold means businesses with an annual turnover of less than $10m will be able to access existing small business income tax concessions including:
- the lower small business corporate tax rate (which will be reduced to 27.5% from the 2016/17 income year)
- immediately deductibility for small business start-up expenses under ITAA 1997 s 40-880
- simplified depreciation rules under ITAA 1997 Subdiv 328-D, including the instant asset write off threshold of $20,000 available until 30 June 2017
- simplified trading stock rules under ITAA 1997 Subdiv 328-E
- roll-over for restructures of small businesses under ITAA 1997 Subdiv 328-G
- option to account for GST on a cash basis and pay GST instalments as calculated by the ATO
- 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 available from 1 April 2016.
The increased $10m threshold will not be applicable for accessing the small business capital gains tax concessions. These concessions will remain available only for small businesses with a turnover of less than $2m or that satisfy the maximum net asset value test. The unincorporated small business tax discount (which will be increased to 8% from 1 July 2016) will however be accessible to small businesses with a turnover of less than $5m.
If you have any questions or other enquires, please contact:
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
“The Government will increase the aggregated turnover threshold for small business entity concessions to $10 million from 1 July 2016, significantly broadening access.”
About the author
Marius Fourie - Director & Business Advisor
As Director and Business Advisor, Marius uses his accounting expertise and empathetic skills to work directly with business owners and help them feel at ease with their finances.
Marius saw a common need in clients that just wasn’t being met by accounting providers.
That need was for clear, open communication and streamlined accounting services that didn’t come padded out with any unnecessary features.
Business owners just don’t have time to compare different accounting firms to see which one has the best packages with the best inclusions (many of which they would pay for but never use).
Key Takeaways
The small business turnover threshold was increased to $10 million to expand concession access.
This raises the eligibility barrier so that more businesses can take advantage of favourable tax treatment.
The new threshold came into effect from 1 July 2016.
From that date, businesses under $10 million aggregated turnover became eligible for a range of small business tax concessions.
Raising the threshold broadens access to key tax concessions.
This includes instant asset write-offs, simplified trade stock rules and simplified GST and PAYG reporting options.
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Frequently Asked Questions
What is the small business turnover threshold change?
The aggregated turnover threshold for determining eligibility for small business tax concessions will be increased to $10 million, meaning more businesses can qualify for a suite of concessions.
When does the increased turnover threshold take effect?
The new $10 million threshold is proposed to apply from 1 July 2016, impacting eligibility for concessions in the relevant income years.
What kinds of tax concessions can businesses access with the higher threshold?
Qualifying businesses can access concessions such as simplified depreciation rules (including an immediate write-off for qualifying assets), simplified trading stock rules, GST cash accounting and instalment methods, and other small business tax concessions.
How does aggregated turnover differ from ordinary turnover?
Aggregated turnover includes the turnover of the business plus the turnover of any connected or affiliated entities — ensuring the threshold reflects the broader group footprint rather than just a single entity.
Why is raising the threshold significant for small business?
By raising the threshold, many more businesses can access concessions that reduce compliance costs and accelerate deductions, improving cash flow and simplifying tax obligations.
What tax benefits can businesses access under the increased $10m threshold?
Eligible businesses can access small business income tax concessions such as the lower small business
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