Small business Entity (SBE) Concessions

A small business entity is entitled to a range of concessions for the year ended 30 June 2019 and 30 June 2020 which potentially offer a range of tax savings to eligible entities. To recap an entity will be regarded as an SBE for the year ended 30 June 2019/20 if it carries on business in the 2019/20 year and its aggregated turnover is less than $10 million for that year. It is important to recognise that the aggregated turnover test not only requires the calculation of the taxpayer’s annual turnover but also that of any affiliate or entity connected with the taxpayer at any time during the year. Aggregated turnover can be calculated under the look back, look forward or actual results tests. Care should therefore be taken in certain cases to confirm that an entity is an eligible SBE where it is part of a group with related entities.

The specific concessions available include:

  • Acquiring any depreciating asset (that is first used or installed ready for use after on or after 7.30pm 2 April 2019 and on or before 30 June 2019) that has a GST-exclusive (where appropriate) cost of less than  $30,000; Making capital improvements (i.e., second element costs) to an existing asset that cost less than $30,000 (GST-exclusive where appropriate) after 2 April 2019 and on or before 30 June 2019, provided the asset was originally eligible for an immediate write-off; and Claiming the general small business pool balance where the closing pool balance on 30 June 2019 is less than $30,000 (referred to as the low pool value).
  • immediate deductibility for capital expenditure incurred in the 2019 year in relation to a proposed business structure including legal and accounting advice on how the business can best be structured and implemented.
  • simplified trading stock rules which relieve entities from undertaking a year-end stocktake where the value of trading stock $5,000 or less. immediate deductibility for certain prepaid business expenses  which may accelerate the timing of certain deductions with related cash flow savings.
  • In order to be deductible a prepayment must be made prior to 30 June and must only be for a maximum of 12 months (i.e. prepaid to 30 June 2020). Examples of expenses which could be prepaid include; rent, interest, and professional membership fees.
  • accounting for Goods and Services Tax (GST) on a cash basis.
  • paying GST by quarterly instalments.