Did you carry on a business at any time during the year and have an aggregated turnover of less than $2 million or are you a former simplified tax system (STS) taxpayer?
No |
Go to P1 Personal services income (PSI). |
Yes |
Read on if you want to find out more about concessions for small business entities. |
Small businesses with an aggregated turnover of less than $2 million are called 'small business entities' and may qualify for a range of tax concessions.
Eligible businesses can choose to use the concessions that best suit their needs. It is not necessary to elect to be a small business entity each year in order to access the concessions. Nonetheless, businesses must review their eligibility each year.
The simplified tax system no longer operates. However, all of its concessions remain available to eligible businesses.
A small business entity may be eligible for the following concessions:
- CGT 15-year asset exemption
- CGT 50% active asset reduction
- CGT retirement exemption
- CGT small business rollover
- Simplified depreciation rules
- Simplified trading stock rules
- Deducting certain prepaid business expenses immediately
- Entrepreneurs tax offset
- Accounting for GST on a cash basis
- Annual apportionment of GST input tax credits
- Paying GST by quarterly instalments
- Fringe benefits tax car-parking exemption
- Pay as you go (PAYG) instalments based on gross domestic product (GDP) - adjusted notional tax
Eligibility
You are a small business entity if you are carrying on a business and have an aggregated turnover of less than $2 million.
Aggregated turnover is your annual turnover plus the annual turnovers of any entities that are connected with you or that are your affiliates (adjusted to ignore dealings between connected entities and affiliates). Using aggregated turnover prevents larger businesses from structuring or restructuring their affairs to take advantage of the small business entity concessions.
You must review your eligibility each year.
For more information on the aggregation rules, read What are the aggregation rules? or phone the Business Infoline.
Calculating your turnover
Turnover includes all ordinary income earned in the ordinary course of business for the income year. The following are some examples of amounts included and not included in ordinary income.
Table: Calculating your turnover
Include these amounts |
Do not include these amounts |
|
|
There are special rules for calculating your annual turnover if you have retail fuel sales or business dealings with associates.
The business operated for only part of the year
If you carried on a business for only part of the income year, your turnover is worked out using a reasonable estimate of what the turnover would have been if you had carried on the business for the whole of the income year. This includes winding up the business.
Satisfying the aggregated turnover threshold
Your business satisfies the $2 million aggregated turnover requirement if you meet one of the following:
- Your aggregated turnover for the previous income year was less than $2 million.
- You estimate at the beginning of the current income year that your aggregated turnover for the year will be less than $2 million (and your aggregated turnover in each of the previous two income years was not more than $2 million).
- Your actual aggregated turnover, worked out at the end of the income year, was less than $2 million. You rely on this test only if you do not satisfy either of the other two tests above. If you satisfy this test only, you cannot use the GST and PAYG concessions for the income year.
For more information about these small business entity concessions, see Guide to concessions for small business entities (NAT 71874).