• Am I a small business entity?

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    Depending on your circumstances there are three methods of working out if you are a small business entity in the current year.

    Method 1 - Use your previous years aggregated turnover

    If your aggregated turnover for the previous income year was less than $2 million, you will be a small business entity for the current year.

    Attention

    When you work out your aggregated turnover for the previous income year apply the current rules about aggregated turnover as if they were in force for the 2006-07 income year.

    End of attention

    Method 2 - Estimate your current year aggregated turnover

    If your estimated aggregated turnover for the current year is less than $2 million, you will be a small business entity for the current year. However, you can only estimate your turnover if your aggregated turnover for one of the two previous income years was less than $2 million.

    Attention

    About estimating your turnover:
    If you are estimating your turnover, you need to determine whether your aggregated turnover is more likely than not to be less than $2 million.

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    You must estimate your turnover based on the conditions you are aware of at the beginning of the income year or, if you are starting a business part way through the year, at the time that you start your business. Factors to consider when estimating your turnover include:

    • your turnover in previous income years
    • whether you plan to reduce or increase staff in the current year
    • whether your business operating hours are increasing or decreasing
    • whether previous extraordinary sales or product lines will be available in the current income year
    • whether your business will face increased competition in the current income year, and
    • whether your business activity will increase or decrease because of changing conditions.
    Attention

    When you work out your aggregated turnover for the previous income years, apply the current rules about aggregated turnover as if they were in force for those years. In the 2005-06 income year, if your aggregated turnover is $2 million or more you can use your simplified tax system (STS) group turnover figure instead if that would be less than $2 million.

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    Method 3 - Use your actual current year turnover

    If your actual aggregated turnover is less than $2 million at the end of the income year, you will be a small business entity for that year.

    Attention

    You must use the same method, either prior year, estimated current year or actual current year, for calculating the annual turnover of your business and all your relevant entities.

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    Winding up a business

    In a year when you are winding up a business, you will be taken to be still carrying on the business and have access to these concessions if you:

    • are winding up a business you previously carried on, and
    • you were a small business entity in the income year you ceased business.
    Last modified: 30 Jun 2009QC 27964