Making the most of small business tax breaks

Trading Stock

Small businesses can opt out of doing an end of year stocktake (which can be expensive) if the value of their trading stock has not gone up or down by more than $5000 in the past financial year.

Simplified depreciation

Small businesses can immediately write off the value of any business assets that were less than $1000. The depreciation on all assets valued at over $1000 can be calculated as a single pool that depreciates at 15% in the first year and 30% every year after that.

However, there are some assets that are excluded from the simplified depreciation rules. Businesses that are using the simplified depreciation should seek advice on any assets that may require a different method of calculating depreciation.

CGT concessions

There are four CGT tax concessions available to small businesses that can be extremely effective in minimising, or even eliminating, CGT liability. These concessions are:

  1. The retirement exemption: Available to small business owners over the age of 55, or when the capital gain is contributed to a superannuation account
  2. The 15 year exemption: Available to retiring small business owners who have held the asset for over 15 years
  3. The 50% active asset reduction: Where an asset is considered to be ‘active’ the CGT liability may be reduced by 50% (the requirements here are complex and it is advisable to seek professional advice)
  4. The CGT rollover: If a business asset is disposed of the CGT bill may be deferred for two years. In cases where businesses acquire a replacement business asset within that 2 year period, some or all of the CGT liability can be deferred for an even longer period.

There are specific rules about the order that these CGT concessions should be applied. We strongly advise you to seek professional advice before applying any to your tax return.

Chat with Us