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Small business turnover threshold to increase to $10m

Posted by Northadvisory on September 15, 2016

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