• Increase the small business entity turnover threshold

    In the 2016-17 Budget, the Government announced an increase to the small business entity turnover threshold from $2 million to $10 million. From 1 July 2016, business with a turnover of less than $10 million will be able to access a range of concessions which are currently only available to business entities with a turnover of less than $2 million.

    The current $2 million turnover threshold will be retained for access to the small business capital gains tax concessions.

    Access to the unincorporated small business tax discount will be limited to entities with turnover less than $5 million.

    Administrative treatment

    We will accept tax returns as lodged during the period up until the outcome of the proposed amendment is known. Once the outcome of the proposed amendment is known taxpayers will need to review their positions back to their 2016-17 income year.

    If the new law is enacted:

    • taxpayers who applied the existing legislation will need to review their position. Those taxpayers who underclaimed deductions can seek amendments and if a reduction in liability results, interest on overpayment will be paid.
    • taxpayers who claimed deductions which accord with the new changes do not need to do anything more.

    If the new law is not enacted:

    • taxpayers who anticipated the law and the law is not passed will need to seek amendments if they have overclaimed deductions. No tax shortfall penalties will be applied and any interest accrued will be remitted to the base interest rate up to the date of enactment of the law change. In addition, any interest in excess of the base rate accruing after the date of enactment will be remitted where taxpayers actively seek to amend assessments within a reasonable timeframe after enactment.

    Legislation and supporting material

    The Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016External Link was introduced to Parliament on 1 September 2016. The Bill was passed with government amendments by the Senate on 31 March 2017. The amended Bill is expected to be re-introduced into the House of Representatives for passage in early May 2017.

    More information

      Last modified: 10 Apr 2017QC 48874