Are you a small business entity?
You will be a small business entity if you are an individual, partnership, company or trust that:
- is carrying on a business
- has less than $2 million aggregated turnover.
Aggregated turnover is your annual turnover plus the annual turnovers of any businesses that are connected with you or that are your affiliates.
The aggregation rules help you determine whether you need to include the annual turnover of another business entity (a relevant entity) when calculating your aggregated turnover. These rules aim to prevent businesses splitting their activities in order to inappropriately access the small business entity concessions.
A relevant entity is an entity that is your affiliate or is connected with you.
There are three alternative methods to work out if you are a small business entity for the current year, but most businesses will only need to consider the first method.
1. Previous year turnover
If your aggregated turnover for the previous income year was less than $2 million, you are a small business entity.
2. Estimate your current year turnover
If you estimate that your aggregated turnover for the current year (worked out as at the first day of the income year) is likely to be less than $2 million, you will be a small business entity for the current year. However, you can only estimate your current year turnover if your aggregated turnover for one of the two previous income years was less than $2 million.
3. Actual current year turnover
If you are unable to use the first two methods, you will need to calculate your aggregated turnover as at the end of the income year. If your actual aggregated turnover is less than $2 million, you will be a small business entity for that year.
Note: If your business is carried on as a partnership, it is the partnership and not the individual partner that must be the small business entity.