Small Business threshold to increase to $10 million

The small business entity threshold will increase from $2 million to $10 million from 1 July 2016.

As a result, a business with an aggregated annual turnover of less than $10 million will be able to access a number of small business tax concessions, including:

  • the simplified depreciation rules;
  • the simplified trading stock rules;
  • a simplified method of paying PAYG instalments calculated by the ATO;
  • the option to account for GST on a cash basis and pay GST instalments as calculated by the ATO

Small Business new CGT exemption

There is a new exemption from capital gains tax (‘CGT’) for small businesses transferring business assets to a new structure. The CGT exemption will be available from 1 July 2016.

For a myriad of reasons – asset protection, tax, growth, estate planning, exit strategy – owners of established businesses often look to own businesses and business assets in a new legal structure.

For businesses with an aggregated annual turnover of less than $2 million, the new exemption opens up the range of transfers to which the exemption may apply.

The effect of the exemption will be:

When transferring business assets,

  • CGT assets will be deemed to have been transferred for their cost base, thus allowing any capital gain to be disregarded.
  • Trading stock will be deemed to be have transferred at cost and rollover relief will be available for depreciating assets.
  • A pre-CGT asset will retain its status. 

 For more information, please contact your tax adviser at WLM.