Small business tax concessions >
The Government will expand access to a range of small business tax concessions by increasing the turnover threshold for eligibility from $10 million to $50 million.
The turnover threshold is based on an entity’s aggregated turnover. Broadly, annual turnover means ordinary business income. Aggregated turnover includes the annual turnovers of the “relevant entities”, being the entity and its connected entities and affiliates. Aggregated turnover can include both Australian and foreign income, but excludes dealings between relevant entities.
From 1 July 2020, eligible businesses will be able to immediately deduct certain expenses when starting up a small business (such as professional, legal and accounting advice), as well as claim deductions upfront on prepayments of expenditure.
From 1 April 2021, eligible businesses will be exempt from FBT on car parking benefits. The exemption is not available to car parking at commercial parking stations, or to entities that are public companies or subsidiaries of public companies. Eligible business will also be able to provide multiple work-related portable electronic devices (such as phones, tablets or laptops) to employees without paying FBT.
From 1 July 2021, eligible businesses will be able to access the simplified trading stock rules, the GDP adjusted notional tax method for PAYG instalments, and settle excise duty monthly on eligible goods. The simplified trading stock rules are likely to have limited application for medium sized businesses as a requirement to apply these rules is that there is a maximum $5,000 difference between opening trading stock and a reasonable estimate of the closing trading stock.
From 1 July 2021, the Commissioner of Taxation’s power to create a simplified accounting method determination for GST purposes will be expanded to apply to businesses with less than $50 million aggregated turnover.
From 1 July 2021, eligible businesses will have a 2-year amendment period for income tax instead of the usual 4 years. This will not however apply to entities with significant international tax dealings or particularly complex affairs (these terms are yet to be defined by the Government) .
The aggregated turnover thresholds remain unchanged for other small business entity concessions such as the small business restructure rollover and the small business CGT concessions.
Division 7A >
The Government has previously announced a series of amendments to Division 7A (which deals with loans from private companies to shareholders or their associates).
The changes being proposed included a single 10 year loan model; bringing old s108 loans into the Division 7A system; treating unpaid trust distributions as Division 7A loans; and a series of other changes. Whilst Division 7A is a complex set of provisions that is in need of significant reform, consultation on the proposed changes showed that they would likely bring with them a further set of issues and complexities.
After missing several announced start dates for the changes, the Government has now announced that amendments to Division 7A will not apply until the date of royal assent of the amending legislation.
Other business measures >
More information on other business measures can be found here.