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  • Definitions

    Table 1: Definitions of the terms used to explain small business entity concessions

    Term

    Definition

    Aggregated turnover

    Your aggregated turnover is your annual turnover (all ordinary income you earned in the ordinary course of running a business for the income year) plus the annual turnover of any entities you are connected with or that are your affiliates.

    When we say 'turnover', we mean 'aggregated turnover'.

    Annual turnover

    Annual turnover is the total ordinary income that you derive in the income year in the course of running your business.

    Assessable income

    Assessable income is your ordinary income and statutory income.

    Associate

    The definition of associate is very broad. As an individual, your associates include but are not limited to:

    • your relatives, such as your spouse or children
    • a partnership you are a partner in
    • another partner in that partnership and that partner's spouse and children
    • a trustee of a trust that you, or your associate, are a beneficiary of
    • a company that you, or your associate, control or influence.

    Similar rules apply to work out who is an associate of a company, partnership and trust.

    Connected with

    An entity is connected with you if:

    • you control or are controlled by that entity
    • both you and that entity are controlled by the same third entity.
     

    Fixed trust

    A trust is a fixed trust if entities have fixed entitlements to all of the income and capital of the trust.

    Non-fixed trust

    A non-fixed trust is a trust that is not a fixed trust. For example a trust where the trustee has the discretion to distribute the trust income to a beneficiary, would not be a fixed trust.

    Ordinary income

    Ordinary income is income according to ordinary concepts. Generally this is amounts that everyone would consider to be income.

    Ordinary course of business

    Generally, you derive income in the ordinary course of running a business if you:

    • regularly or customarily derive the income in the course of running a business, not from any special circumstance or unusual event
    • don't regularly derive the income but you do derive it directly from your normal business activities.

    You may derive ordinary income in the ordinary course of running your business, even if the income is not the main type of ordinary income you derive. The income does not need to account for a significant part of your business's overall receipts. It is sufficient that the ordinary income is of a kind derived regularly or customarily in the course of running your business.

    Person

    A person is an individual but also includes a company or other entity that is considered a person for legal purposes.

    Relevant business

    A relevant business is a business entity that is your affiliate or connected with you.

    Retail fuel

    Retail fuel means taxable fuel, within the meaning of the Fuel Tax Act 2006, that is sold by retail. Generally, this includes fuel on which duty is payable under customs and excise law and also includes compressed natural gas, liquefied petroleum gas, or liquefied natural gas.

    Small business

    When we say 'small business', we mean 'small business entity'.

    Small business entity

    You are a small business entity if you are carrying on a business with less than $10 million aggregated turnover. When we say 'you' we mean the individual, partnership, company or trust that runs the business.

    Statutory income

    Statutory income is income that is not ordinary income and that you include in assessable income because of a specific rule in the tax law. For example, a net capital gain is statutory income. If a receipt is classed as both ordinary income and statutory income, the statutory rule prevails.

    Trading stock

    Trading stock includes:

    • anything you produce, manufacture or acquire that you hold for purposes of manufacture, sale or exchange in the ordinary course of your business
    • livestock.
     
    Last modified: 22 May 2017QC 50241