To work out if you are eligible for small business entity concessions, you first need to work out if you are a ‘small business entity’ in an income year. You must review your eligibility each year to check if you are able or required to use a particular concession.
When we say:
- ‘small business’ – we mean ‘small business entity’
- ‘turnover’ – we mean ‘aggregated turnover’.
From 1 July 2016, you are a small business if you are a sole trader, partnership, company or trust that:
- operates a business for all or part of the income year, and
- has a turnover less than $10 million (the turnover threshold).
The $10 million turnover threshold applies to most concessions, except for:
- the small business income tax offset – which has a $5 million turnover threshold
- the capital gains tax (CGT) concessions – which continue to have a $2 million turnover threshold.
For previous income years, you are a small business if your turnover is less than $2 million.
From 1 April 2017, the turnover threshold for fringe benefits tax (FBT) concessions increased to $10 million (will increase to $50 million from 1 April 2021) .
Expanded access to small business concessions
From 1 July 2020 – businesses that are not small businesses because their turnover is $10 million or more but less than $50 million can also access an immediate deduction for certain start-up expenses and for prepaid expenditure.
From 1 April 2021 – the turnover threshold for FBT concessions will increase to $50 million.
From 1 July 2021 – businesses that are not small businesses because their turnover is $10 million or more but less than $50 million may also be eligible to access these small business concessions:
- simplified trading stock rules
- PAYG instalments concession
- a two-year amendment period
- excise concession.