Raft of tax concessions available for entities with turnover < $10 million
For the current 2018 income tax year, the small business entity threshold is $10 million (for the 2016 income tax year the small business entity threshold was only $2 million).
Therefore, such small business entities (e.g. companies with a total turnover of less than $10 million) will qualify for the following concessions in the 2018 income tax year:
- $20,000 instant asset write-off (i.e. an immediate write-off for depreciable assets costing less than $20,000);
- Access to the small business depreciation pool (i.e. accelerated depreciation rates of 15% or 30%) for depreciable assets costing $20,000 or more;
- Simplified trading stock rules (i.e. not required to do a stocktake if there are no significant variations in stock levels in a year); and
- Shorter amendment period for tax returns (i.e. 2 years instead of 4 years).
Furthermore, such businesses – when lodging their business activity statements (BAS) – will:
- only have to inform the ATO about GST on purchases and total sales (instead of filling in a number of other labels that may not be relevant to the business);
- be able to electronically lodge a nil activity statement with just one click (i.e. without having to fill in each label with a zero); and
- be able to sign the declaration by merely clicking a checkbox (i.e. without having to use AUSkey or myGov credentials).
Note however that access to the small business CGT concessions remain limited to entities with either a total turnover of less than $2 million (i.e. this test is not increased to the $10 million turnover threshold) or total net asset value of less than $6 million.
Furthermore, companies with a turnover of less than $25 million for the 2018 income tax year will be taxed at a rate of 27.5%.
The increase in the small business entity threshold to $10 million offers tremendous opportunities for businesses – please contact us if your business has a turnover of less than $10 million so that we can discuss in more detail how your business may benefit.
Make your trust resolutions before 30 June
Trustees of discretionary trusts are reminded to make trust resolutions (i.e. decide how to distribute the income of the trust to the beneficiaries) before 30 June 2018 (or an earlier date if the trust specifies such an earlier date).
Failure to make such a trustee resolution may lead to a trustee assessment at the top marginal tax rate on all of the trust’s net income (if the trust deed does not contain a default/balance beneficiary clause).
Due to the complexities of the tax laws dealing with trusts, please speak to your Nexia Adviser about your trust’s 2018 resolution and potential strategies when dealing with trusts.