It’s no secret that in Australia small businesses receive favourable tax treatment. With a range of concessions on offer it is important for small businesses to know if they are eligible and exactly what they are eligible for.

Below are some of the more popular and commonly utilised concessions available to small business entities: 

Simplified depreciation rules

Small business entities can claim an immediate deduction for most low cost assets. Furthermore they can pool all other assets to simplify and often increase depreciation claims.

Since 1 July 2012 small business entities could claim an immediate deduction for most assets costing less than $6,500 each, however, the government has announced its intention to reduce the instant asset write-off threshold to $1,000 with effect from 1 January 2014.

For assets over the write off threshold small businesses can claim 15% of the cost in the year they acquire the asset and 30% per annum for each year thereafter on a diminishing value basis.

Furthermore, when depreciating assets are sold the proceeds are applied against the carrying value of the entire pool of assets, which can help reduce any current year gains on sale.

Immediate deductions for prepaid expenses

Small businesses can claim an immediate deduction for prepaid expenses where the payment covers a period of 12 months or less that ends in the next income year.

This is very handy and presents a lot of tax planning opportunities for small business taxpayers with the opportunity to prepay their expenses.

Simplified trading stock rules

Small businesses can choose whether or not to do an end-of-year stocktake and account for changes in the value of trading stock, if the value of trading stock has not increased or decreased by more than $5,000 over the year.

This can save on time costs involved in stocktakes and lessens the overall compliance burden for small business owners. 

If you would like some assistance either assessing your eligibility or maximising your benefits from small business tax concessions contact us today.