Who can access the concessions
Small businesses can access a range of concessions including payment and reporting options.
This applies to sole traders, partnerships, companies or trusts.
Eligibility
To qualify for these concessions, you need to confirm your business is a 'small business entity' for the income year. You need to review this each year.
You are a small business entity if you are a sole trader, partnership, company or trust, that both:
- operates a business for all or part of the income year
- has an aggregated turnover that is less than $10 million (the turnover threshold).
When we say:
- 'small business' – we mean 'small business entity'
- 'turnover – we mean 'aggregated turnover'.
The $10 million turnover threshold applies to most concessions, except for:
- the small business income tax offset, which has a $5 million turnover threshold
- the capital gains tax (CGT) concessions, which have a $2 million turnover threshold.
- certain fringe benefits tax (FBT) concessions, which have a $50 million turnover threshold from 1 April 2021.
Work out if you're a small business entity
You are a small business entity for the current income year if your turnover is either:
- less than $10 million in the previous income year
- estimated to be less than $10 million for the current year
- actually less than $10 million at the end of the current year.
There are some restrictions about how and when you can estimate your turnover for the current year. Some concessions won't be available if you use your actual turnover to qualify.
If you are completing a tax return for 2015–16 or an earlier income year, your estimated turnover for that year, as well as one of the two previous income years, must be less than $2 million.
Aggregated turnover
Aggregated turnover is generally your annual turnover plus the annual turnover of any business in Australia or overseas that is:
- connected with you
- your affiliate.
Annual turnover is all ordinary income you earned in the ordinary course of running a business for the income year.
It's your gross income, rather than your net profit. When working this out exclude any GST amounts you charge on a transaction.
There are aggregation rules that determine whether you need to include the annual turnover of another entity in your aggregated turnover.
If you're not a small business entity
If you're not a small business entity in an income year because of your turnover, you may still be able to access some of these concessions:
- temporary full expensing
- for the business portion of the cost of eligible new depreciating assets, first used or installed ready for use, between 7:30 pm AEDT on 6 October 2020 to 30 June 2023, if your turnover is less than $5 billion
- for the business portion of the cost of eligible second-hand depreciating assets, first used or installed ready for use, between 7:30 pm AEDT on 6 October 2020 to 30 June 2023, if your turnover is less than $50 million
- for the business portion of the cost of improvement to eligible depreciating assets incurred between 7:30 pm AEDT on 6 October 2020 and 30 June 2023, if your turnover is less than $5 billion
- simpler depreciation rules – instant asset write-off – if your turnover is less than $500 million (for eligible assets that were first used, or installed ready for use, between 12 March 2020 and 30 June 2021, purchased by 31 December 2020, and the cost was less than $150,000)
- backing business investment – accelerated depreciation for the 2019–20 and 2020–21 income years if your turnover is less than $500 million
- deductions for professional expenses for start-ups – from 1 July 2020 if your turnover is less than $50 million
- simplified trading stock rules – from 1 July 2021 if your turnover is less than $50 million
- immediate deductions for prepaid expenses – from 1 July 2020 if your turnover is less than $50 million
- income tax return amendments - 2-year amendment period for 2023–24 and earlier income years and a 4-year amendment period for 2024–25 and later income years if your annual aggregated turnover is less than $50 million
- capital gains tax concessions – if you pass the $6 million maximum net asset value test
- excise concession – from 1 July 2023, if your turnover is less than $50 million, you may be eligible to report and pay your excise obligations monthly or quarterly
- FBT car parking exemption and FBT work-related devices exemption for benefits provided on or after 1 April 2021 if your turnover is less than $50 million
- PAYG instalments concession from 1 July 2021 if your turnover is less than $50 million.
Range of concessions
As a small business entity you can access a range of concessions. There are different eligibility requirements for some of the concessions below.
Income tax concessions
As a small business entity, you may be eligible for the following income tax concessions.
Simpler depreciation rules – instant asset write-off
You may be able to claim an immediate deduction for the business portion of the cost of each eligible new or second-hand depreciating assets under the instant asset write-off. The cost of each eligible asset must be less than the limit applicable at the time the asset was first used or installed ready for use. The limits for assets first used or installed ready for use are:
- from 1 July 2023 to 30 June 2025 – $20,000
- from 12 March 2020 to 30 June 2021 for assets purchased between 7:30 pm (AEST) on 1 May 2015 and 31 December 2020 – $150,000
- from 7:30 pm (AEDT) on 2 April 2019 to 11 March 2020 – $30,000
- from 29 January 2019 to prior to 7:30 pm (AEDT) on 2 April 2019 – $25,000
- from 1 July 2016 to 28 January 2019 – $20,000.
Temporary full expensing
You can immediately deduct the business portion of the cost of eligible new or second-hand depreciating assets under temporary full expensing. These assets must be first held and first used, or installed ready for use for a taxable purpose, between 7:30 pm (AEDT) on 6 October 2020 and 30 June 2023.
You can also immediately deduct the business portion of the cost of improvements made to eligible depreciating assets if those costs are incurred between 7:30 pm (AEDT) on 6 October 2020 and 30 June 2023.
You also deduct the balance of your small business pool at the end of an income year ending between 6 October 2020 and 30 June 2023.
Backing business investment – accelerated depreciation
For the 2019–20 and 2020–21 income years, you can claim accelerated depreciation deductions for eligible new assets if they are first held on or after 12 May 2020, and first used or installed ready for use for a taxable purpose between 12 March 2020 and 30 June 2021.
If you are using the small business simplified depreciation rules, you can claim 57.5% of the business portion of the cost of the asset (for those assets that cost more than the instant asset write-off limit) in the first year you add the asset to the small business pool.
If you are not using the simplified depreciation rules, you can claim a deduction of 50% of the cost or opening adjustable value of an eligible asset on first use or installation. Existing depreciation rules apply to the balance of the asset’s cost.
You can't claim a backing business investment – accelerated depreciation deduction if the business is eligible and applies temporary full expensing or instant asset write-off to the same asset.
Lower company tax rates
From the 2017–18 income year, you may be eligible for a lower company tax rate if you are a base rate entity.
A company is a base rate entity if:
- their turnover is less than the turnover threshold – $25 million for the 2017–18 income year and $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, or a net capital gain).
The lower company tax rate is
- 27.5% for the 2017–18 to 2019–20 income years
- 26% for the 2020–21 income year
- 25% from the 2021–22 income year onwards.
When working out the rate to use when franking your distributions, you need to assume that your turnover, assessable income and base rate passive income will be the same as the previous income year.
If you were a small business in previous years, you may have also been eligible for the lower company tax rate, which was:
- 27.5% for the 2016–17 income year – the maximum franking credit allocated to a frankable distribution was determined by your corporate tax rate for imputation purposes.
- 28.5% for the 2015–16 income year – the maximum franking credit allocated to a frankable distribution was 30%.
For more information see Changes to company tax rates.
Small business income tax offset
You can claim a tax offset on the tax payable on your net small business income as a sole trader, and your share of net small business income from a partnership or trust.
If you are a small business with a turnover less than $5 million, the tax offset is:
- 8% up to $1,000 for the 2016–17 to 2019–20 income years
- 13% up to $1,000 for the 2020–21 income year
- 16% up to $1,000 for the 2021–22 income year onwards.
For the 2015–16 income year, if you were a small business with a turnover less than $2 million, the tax offset was 5% up to $1,000.
We work out your offset based on amounts you show in your income tax return.
Accelerated depreciation for primary producers
If you're a primary producer:
- from 12 May 2015 – you can immediately deduct the costs of fencing and water facilities
- from 19 August 2018 – you can immediately deduct the cost of fodder storage assets.
Deductions for professional expenses for start-ups
From 1 July 2015, you can deduct certain costs when starting up a small business. These costs include professional, legal and accounting advice and government fees and charges.
Small business restructure rollover
From 1 July 2016, you can change the legal structure of your business without incurring any income tax liability when active assets (CGT assets, trading stock, revenue assets and depreciating assets) are transferred by one entity to another.
Simplified trading stock rules
You can choose whether or not to do an end-of-year stock take if the value of your trading stock has not increased or decreased by more than $5,000 over the year.
Immediate deductions for prepaid expenses
You can claim an immediate deduction for prepaid business expenses where the payment covers a period of 12 months or less that ends in the next income year.
Income tax return amendment period
If your annual aggregated turnover is less than $50 million, you have a time limit to amend your income tax assessment:
- 2-year time limit for the 2023–24 and earlier income years
- 4-year time limit for the 2024–25 and later income years.
The time limit begins on the day after we give you the notice of assessment for the income year in question. This is generally taken to be the date on the notice or, if we don't issue a notice, the date the relevant return was lodged.
CGT concessions
As a small business, you may be eligible for the following capital gains tax (CGT) concessions if you dispose of an active asset and meet the basic eligibility conditions.
15-year exemption
Under the small business 15-year exemption, you will not have to pay CGT when you dispose of an active asset if you continuously owned the asset for at least 15-years prior to the disposal and:
- You are 55 years old or older and the disposal of the asset is in connection with your retirement, or
- You are permanently incapacitated.
Find out more about the Small business 15-year exemption.
50% active asset reduction
Under the small business 50% active asset reduction, if you have owned an active asset, you’ll only pay tax on 50% of the capital gain when you dispose of the asset. You only need to meet the basic eligibility conditions to apply this concession.
Find out more about the Small business 50% active asset reduction.
Retirement exemption
When you claim the small business retirement exemption, capital gains from the sale of active assets are exempt up to a lifetime limit of $500,000. If you're under 55 years old, the exempt amount must be paid into a complying super fund or a retirement savings account.
Find out more about the Small business retirement exemption.
Roll-over
The small business roll-over allows you to defer all, or part of a capital gain made from disposing of an active asset to a later income year. You can choose the roll-over before you acquire a replacement asset or incur costs on capital improvements to an existing asset.
Find out more about the Small business roll-over.
GST concessions
If your small business has a turnover of less than $10 million, you may be eligible for GST concessions.
Accounting for GST on a cash basis
You can choose to account for GST using the cash accounting method. This means you are not required to account for the GST on a sale you make until you receive payment for the sale. Find out more about accounting for GST on a cash basis.
Paying GST by instalments
You can choose to pay GST by instalments that we work out for you. You can vary this amount each quarter if you think your total instalments for the year will be more (or less) than your GST liability. Find out more about GST instalments.
Annual apportionment of GST credits
You can claim full GST credits on your activity statements for items you purchase and use partly for private purposes. You then make a single adjustment for the private use percentage at the end of the year. Find out more about annual private apportionment of GST.
Excise concession
You can apply to defer settlement of your excise duty and excise equivalent customs duty from a weekly to a monthly reporting cycle. To do this, apply in writing to vary your periodic settlement permission (PSP).
The turnover threshold for this concession is less than:
- $50 million from 1 July 2023
- $10 million from 1 July 2016 to 30 June 2023.
FBT concessions
As a small business, you may be eligible for fringe benefits tax (FBT) concessions that reduce your FBT liability if your annual aggregated turnover is less than $50 million and you provide your employees with:
- car parking
- one or more portable electronic devices in an FBT year that are primarily used for work purposes such as laptops, tablets, calculators, GPS navigation receivers and mobile phones.
Find out more about Exemptions from car parking fringe benefits or Work-related items exempt from FBT.
If you take advantage of these small business FBT concessions, you must keep records that show how you calculated the taxable value of the benefits and support any FBT exemptions you used. Find out more about Record keeping for FBT.
PAYG instalment concession
As a small business, you can pay PAYG by instalments using an amount we work for out for you. If required, you can vary this amount each quarter. To choose this option, complete the details under option 1 on your first activity statement or instalment notice for the year. Once chosen, it applies for the whole income year.
The turnover threshold for this concession is:
- $10 million from 1 July 2016.
- $2 million up to 30 June 2016.
Super
As a small business, you may be eligible for the following super concessions.
Small Business Superannuation Clearing House
The Small Business Superannuation Clearing House helps you pay super guarantee contributions for all your employees in a single electronic payment.
You can access this service if you have fewer than 19 employees or an annual aggregated turnover under $10 million.
The SBSCH service will be closed from 1 July 2026
The recent government announcementExternal Link provided more detail about the implementation of Payday super.
As part of this reform, from 1 July 2026 the ATO’s Small Business Superannuation Clearing House (SBSCH) will be closed.
We'll ensure there is sufficient notice and information for small business to transition to an alternative. Find out more about Payday super.
Contributions to your super fund
You may be able to contribute amounts from the CGT 15-year asset exemption and CGT retirement exemption to your super fund without affecting your non-concessional contributions limits.
The turnover threshold for this concession is $2 million as it relates to CGT concessions (this threshold has not changed).
More information
You can find out more about the small business entity concessions including what is new and if you are eligible at Small business entity concessions.
If you do not speak English well and want to talk to a tax officer, phone the Translating and Interpreting Service (TIS) on 13 14 50 for help with your call.
People who are deaf or have a hearing or speech impairment can contact us through the National Relay Service (NRS). There are two easy steps:
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For ATO 1800 free-call numbers, phone 1800 555 727.
You can also use our business self-service or speak to your registered tax agent.