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  • Small business taxpayers

    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

    The Treasurer's Press Release No. 58, 21 September 1999 announced reforms to certain business tax concessions effective from the time of the announcement. These reforms included the end of accelerated depreciation and removal of the balancing charge offset.

    However, a small business can generally retain accelerated rates of depreciation until the start of the proposed Simplified Tax System for small business on 1 July 2001, provided that the following conditions are met at the time the plant is first used or installed ready for use:

    • it is a small business taxpayer for that income year
    • at least 50 per cent of the intended use of the plant is in carrying on a business for income-producing purposes
    • it is not reasonably likely to expand beyond being a small business taxpayer for the next 3 income years because of the plant's use, and
    • the plant is not to be let or leased other than for short-term hire.

    Small businesses which are able to continue to use accelerated rates of depreciation will not be able to reassess the effective life of their plant.

    Definition

    You are a small business taxpayer if you carry on a business during the income year and either:

    • your average turnover for the year is less than $1 million, or
    • you choose to recalculate your average turnover for an income year before the 2001-02 income year and it is less than $1 million.

    Average turnover

    Generally, your average turnover for an income year is the average of your 'group turnovers' for the current year and the preceding 2 years, if any. However, you can only average the years in which you carried on a business. For example, if you have carried on a business for the current and previous year only, you would average only the sum of group turnovers for those 2 years.

    You are taken to be carrying on a business in an income year if you are winding up a business you formerly carried on and you were a small business taxpayer at the time that you stopped carrying on the business.

    You may choose to recalculate the average turnover for an income year before the 2001-02 income year by calculating the average of the group turnover of the current year and a reasonable estimate of the group turnover for the following 2 years.

    Group turnover

    To determine the group turnover for an income year, a small business taxpayer's turnover is grouped with the turnover of entities it controls or is controlled by. These grouping measures are based on those that apply under the CGT roll-over relief for small business.

    Last modified: 07 Jan 2005QC 27380