As previously reported here, the Government introduced a Bill into Parliament to increase the aggregated turnover threshold for small business entities seeking to access small business tax concessions to less than $10 million and to reduce the corporate tax rate for small business entities to 27.5% from the 2016/17 income years.

The Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016 has been passed by Parliament containing amendments to progressively reduce the corporate tax rate and increase the small business turnover thresholds for access to small business direct tax concessions. The legislation contains measures that include:

  • Small businesses with an aggregated turnover of less than $10 million may now access most small business tax concessions– including the small business restructure roll-over relief provisions that were introduced last year.  The aggregated turnover threshold of less than $2 million remains for the purpose of the capital gains tax small business concessions in Div 152 of the Income Tax Assessment Act 1997
  • Small businesses with an aggregated turnover of less than $5 million may access the small business income tax offset.
  • The corporate tax rate of 27.5% will apply as follows:
    • in 2016/17 for businesses with an aggregated turnover of less than $10 million; 
    • in 2017/18 for business with an aggregated turnover of less than $25 million turnover; and
    • in 2018/19 for business with an aggregated turnover of less than $25 million turnover $50 million.
  • The corporate tax rate will be progressively reduced for all corporate entities to:
    • 27% for the 2024/25 income years; 
    • 26% for the 2025/26 income years; and 
    • 25% for the 2026/27 and later income years.

As a result of the legislation, some businesses that previously may not have been able to satisfy the requirements for rollover relief from direct taxation in relation to a restructure will now be able to do so for qualifying transfers of their capital gains tax assets, revenue assets and trading stock where this occurs as part of a genuine business restructure. 

The explanatory memorandum to the legislation estimates that increasing the small business threshold to $10 million will allow an additional 90,000 to 100,000 businesses to access the small business tax concessions. 

Please contact us if you wish to discuss the impact and opportunities that the changes may present for small businesses.

Dianne Sisak Penjalov
Senior Associate
T: 03 5226 8582
E: diannes@ha.legal

Rod Payne
Principal
T: 03 5226 8541
E: rpayne@ha.legal