Income tax concessions

As a small business, you may be eligible for the following income tax concessions if your turnover is below the turnover threshold in the income year.

From 1 July 2016, the turnover threshold is:

• $5 million for the small business income tax offset
• $10 million for all other income tax concessions.

The turnover threshold up to 30 June 2016 was $2 million for all these concessions.

If you are not a small business because of your turnover, some of these income tax concessions may still be available to you.

On this page:

• Deductions for professional expenses for start-ups
• Small business restructure rollover
• Simplified trading stock rules
• Immediate deductions for prepaid expenses
• Two-year amendment period

See also:

• Simplified depreciation rules – instant asset write-off
• Accelerated depreciation for primary producers
• Lower company tax rate changes
• Increased small business income tax offset

Deductions for professional expenses for start-ups

From 1 July 2015, small businesses are entitled to certain deductions when starting up a small business. The range of deductible start-up costs includes professional, legal and accounting advice and government fees and charges.

If their turnover is less than $50 million businesses are also entitled to deductions for these start-up costs from 1 July 2020.

See also:

• Certain start-up expenses immediately deductible

Small business restructure rollover

From 1 July 2016, small businesses can change the legal structure of their business without incurring any income tax liability when active assets are transferred by one entity to another.

This rollover applies to active assets that are CGT assets, trading stock, revenue assets and depreciating assets used, or held ready for use, in the course of carrying on a business.

See also:

• Small business restructure rollover

Simplified trading stock rules

This concession allows you to estimate the value of your trading stock at the end of the financial year to report in your tax return. You will need to record how you estimated the value of your stock, but you don't need to notify us that you have chosen to use an estimate.

You can choose not to conduct a stocktake (and account for changes in the value of your trading stock) if there is a difference of $5,000 or less between:

• the value of your stock at the start of the income year
• a reasonable estimate of the value of your stock at the end of the year.

If you choose not to use an estimate, you will need to conduct a stocktake and account for the changes in the value of your stock.

If your turnover is less than $50 million you can access the simplified trading stock rules from 1 July 2021.

See also:

• Simplified trading stock rules

Immediate deductions for prepaid expenses

You can claim an immediate deduction for prepaid expenses where the payment covers a period of 12 months or less that ends in the next income year.

If your turnover is less than $50 million you can deduct these prepaid expenses from 1 July 2020.

See also:

• Summary of rules including the 12-month rule

Two-year amendment period

As a small business, you generally have a two-year time limit, from the day we issued your notice of assessment, for reviewing an assessment.

If your turnover is less than $50 million, the two-year time limit also applies to your assessment for an income year starting on or after 1 July 2021.

See also:

• Time limits on tax return amendments
• Income tax decisions