Show download pdf controls
  • What's new for small business

    Tax concessions for small businesses have changed.

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

    Find out about:

    See also:

    • Concessions – see what small business tax concessions are available to you

    Simplified depreciation rules – instant asset write-off

    The $20,000 instant asset write-off threshold has been extended to 30 June 2019.

    If you are a small business, you can immediately deduct the business portion of most assets that cost less than $20,000 each if they were purchased:

    • from 1 July 2016 to 30 June 2019, and your turnover is less than $10 million
    • from 7.30pm on 12 May 2015 to 30 June 2016, and your turnover is less than $2 million.

    This deduction is used for each asset that costs less than $20,000, whether new or second-hand. You claim the deduction through your tax return, in the year the asset was first used or installed ready for use.

    See also:

    Accelerated depreciation for primary producers

    Fodder storage

    You can claim a deduction for the full cost of a fodder storage asset, if you:

    • incurred the expense either
      • on or after 19 August 2018
      • before 19 August 2018 and it was first used or installed ready for use on or after 19 August 2018
    • mainly use it to store fodder
    • use it in a primary production business on land in Australia – even if you are only a lessee of the land.

    Claim the deduction through your tax return in the year you incurred the expense.

    Otherwise, you will continue to depreciate fodder storage assets over three years if you incurred the expense from 7.30pm AEST, 12 May 2015 to 18 August 2018.

    If you are impacted by drought, information about ATO assistance is available at Drought help or phone us on 1800 806 218 to discuss your situation.

    Fencing and water facilities

    From 7.30pm AEST, 12 May 2015, primary producers can immediately deduct the costs of fencing and water facilities.

    See also:

    Lower company tax rate changes

    2017–18 income year

    From the 2017–18 income year, a company must be a base rate entity to be eligible for the lower 27.5% company tax rate.

    A company is a base rate entity if both of the following apply:

    • they have a turnover less than the turnover threshold – which is $25 million for the 2017–18 income year (increased to $50 million from the 2018–19 income year)
    • 80% or less of their assessable income is base rate entity passive income (such as interest, dividends, rent, royalties and net capital gain).

    When working out the rate to use when franking your distributions, you need to assume that your aggregated turnover, assessable income and base rate passive income will be the same as the previous year.

    2016–17 income year

    For the 2016–17 income year, the lower company tax rate decreased to 27.5%. Companies are eligible for this rate if they are a small business that both:

    • has a turnover less than $10 million
    • operates a business for all or part of the income year – see Draft Taxation Ruling TR 2017/D7 for what it means for a company to be 'carrying on a business'.

    The maximum franking credit that can be allocated to a frankable distribution is determined by the corporate tax rate for imputation purposes.

    Future years

    The lower company tax rate will gradually reduce for base rate entities from the 2024–25 income year till it reaches 25% by the 2026–27 income year.

    Note:

    • You still need to be a small business to be eligible for other small business tax concessions.
    • The tax rates for all other companies do not change.

    See also:

    Expanded access to small business concessions

    More businesses are now eligible for most small business tax concessions.

    From 1 July 2016, a range of small business tax concessions became available to all businesses with turnover less than $10 million (the turnover threshold). Previously the turnover threshold was $2 million.

    The $10 million turnover threshold applies to most concessions, except for:

    • the small business income tax offset, which has a $5 million turnover threshold from 1 July 2016
    • capital gains tax (CGT) concessions, which continue to have a $2 million turnover threshold.

    The turnover threshold for fringe benefits tax (FBT) concessions increased to $10 million from 1 April 2017.

    See also:

    • Eligibility – to work out if you're eligible for small business entity concessions
    • Concessions – to see what small business concessions you can access

    Increased small business income tax offset

    You can claim the small business income tax offset if you are a small business sole trader, or have a share of net small business income from a partnership or trust.

    From the 2016–17 income year, the small business income tax offset:

    • increased to 8%, with a limit of $1,000 each year
    • applies to small businesses with turnover less than $5 million.

    The tax offset increases to 10% in 2024–25, to 13% in 2025–26 and to 16% from the 2026–27 income year.

    We work out your offset based on amounts shown in your tax return.

    See also:

    Tax professionals

    If you're a tax professional, check out our information on claiming the offset for practical tips on how to avoid common errors at the different labels.

    Next step:

    Lodging using myTax

    If you use myTax, we will work out your offset based on amounts shown in your tax return. You will need to report your business income in two places, at both:

    • Business/sole trader, partnership and trust income (including loss details) to count towards your taxable income.
    • Small business income tax offset (under 'Offsets') so we can work out your offset.

    There's a range of income that is not eligible for the offset, for example, you cannot include personal services income or salary, wages or director's fees.

    See also:

    Last modified: 19 Oct 2018QC 47369