Show download pdf controls
  • What's new for small business

    Tax concessions for small businesses have changed.

    When we say 'turnover', we mean aggregated turnover.

    Find out about:

    See also:

    • Concessions – see what small business tax concessions are available to you

    Simplified depreciation rules – instant asset write-off

    There have been changes to the instant asset write-off.

    The instant asset write-off threshold has increased to $30,000 from 7.30pm (AEDT) 2 April 2019 and extended to 30 June 2020. As of 1 July 2020 the threshold will revert to $1,000.

    If you are a small business (with a turnover of less than $10 million), you can claim a deduction for each asset first used or installed ready for use, costing less than the following thresholds:

    • $30,000, from 7.30pm (AEDT) on 2 April 2019 until 30 June 2020
    • $25,000, from 29 January 2019 to 7.30pm (AEDT) on 2 April 2019
    • $20,000, before 29 January 2019.

    The threshold reverts to $1,000 from 1 July 2020.

    You may purchase and claim a deduction for multiple assets provided each asset costs less than the relevant threshold.

    From 2 April 2019, the instant asset write-off has also been expanded to include businesses with a turnover from $10 million to less than $50 million.

    For assets purchased for $30,000 or more, the general depreciation rules must be used.

    See also:

    Accelerated depreciation for primary producers

    Fodder storage

    You can claim a deduction for the full cost of a fodder storage asset, if you:

    • incurred the expense either        
      • on or after 19 August 2018
      • before 19 August 2018 and it was first used or installed ready for use on or after 19 August 2018
       
    • mainly use it to store fodder
    • use it in a primary production business on land in Australia – even if you are only a lessee of the land.

    Claim the deduction through your tax return in the year you incurred the expense.

    Otherwise, you will continue to depreciate fodder storage assets over three years if you incurred the expense from 7.30pm AEST, 12 May 2015 to 18 August 2018.

    If you are impacted by drought, information about ATO assistance is available at Drought help or phone us on 1800 806 218 to discuss your situation.

    Fencing and water facilities

    From 7.30pm AEST, 12 May 2015, primary producers can immediately deduct the costs of fencing and water facilities.

    See also:

    Lower company tax rate changes

    2018–19 income year

    From the 2018–19 income year, a company must be a base rate entity to be eligible for the lower 27.5% company tax rate.

    A company is a base rate entity if both of the following apply:

    • they have a turnover less than the turnover threshold – which is $50 million for the 2018–19 income year
    • 80% or less of their assessable income is base rate entity passive income (such as interest, dividends, rent, royalties and net capital gain).

    When working out the rate to use when franking your distributions, you need to assume that your aggregated turnover, assessable income and base rate passive income will be the same as the previous year.

    2017–18 income year

    From the 2017–18 income year, a company must be a base rate entity to be eligible for the lower 27.5% company tax rate.

    A company is a base rate entity if both of the following apply:

    • they have a turnover less than the turnover threshold – which is $25 million for the 2017–18 income year
    • 80% or less of their assessable income is base rate entity passive income (such as interest, dividends, rent, royalties and net capital gain).

    When working out the rate to use when franking your distributions, you need to assume that your aggregated turnover, assessable income and base rate passive income will be the same as the previous year.

    2016–17 income year

    For the 2016–17 income year, the lower company tax rate decreased to 27.5%. Companies are eligible for this rate if they are a small business that both:

    • has a turnover less than $10 million
    • operates a business for all or part of the income year – see Taxation Ruling TR 2019/1 for guidance on when a company 'carries on a business'.

    The maximum franking credit that can be allocated to a frankable distribution is determined by the corporate tax rate for imputation purposes.

    Future years

    The lower company tax rate will reduce – for base rate entities – to 26% in 2020–21 and to 25% from the 2021–22 income year.

    Note:

    • You still need to be a small business to be eligible for other small business tax concessions.
    • The tax rates for all other companies do not change.

    See also:

    Increased small business income tax offset

    You can claim the small business income tax offset if you either:

    • are a small business sole trader
    • have a share of net small business income from a partnership or trust.

    From the 2016–17 income year, the small business income tax offset:

    • increased to 8%, with a limit of $1,000 each year
    • applies to small businesses with turnover less than $5 million.

    The tax offset increases to 13% in 2020–21 and to 16% from the 2021–22 income year.

    We work out your offset based on amounts shown in your tax return.

    See also:

    Tax professionals

    If you're a tax professional, check out our information on claiming the offset for practical tips on how to avoid common errors at the different labels.

    Next step:

    Lodging using myTax

    If you use myTax, we will work out your offset based on amounts shown in your tax return. You will need to report your business income in two places, at both:

    • business/sole trader, partnership and trust income (including loss details) to count towards your taxable income
    • small business income tax offset (under 'Offsets') so we can work out your offset.

    There's a range of income that is not eligible for the offset, for example, you cannot include personal services income or salary, wages or director's fees.

    See also:

    Expanded access to small business concessions

    More businesses are now eligible for most small business tax concessions.

    From 1 July 2016, a range of small business tax concessions became available to all businesses with turnover less than $10 million (the turnover threshold). Previously the turnover threshold was $2 million.

    The $10 million turnover threshold applies to most concessions, except for:

    • the small business income tax offset, which has a $5 million turnover threshold from 1 July 2016
    • capital gains tax (CGT) concessions, which continue to have a $2 million turnover threshold.

    The turnover threshold for fringe benefits tax (FBT) concessions increased to $10 million from 1 April 2017.

    See also:

    • Eligibility – work out if you're eligible for small business entity concessions
    • Concessions – see what small business concessions you can access
    Last modified: 01 Oct 2019QC 47369