Small Business Restructure Roll-over – aggregated turnover test to be increased to $10 million

The Government has confirmed that the proposed increase of the aggregated turnover threshold for small business entities of $10 million will apply to the Small Business Restructure Roll-over relief provisions available from 1 July 2016.

As part of the 2016-17 Federal Budget, on 3 May 2016 the Government announced that it proposed to increase the aggregated turnover threshold for access to most small business tax concessions to $10 million. The announcement included a proviso that the $2 million threshold would be retained for the small business capital gains tax measures.

As a result of the exception for the CGT small business concessions, there was some conjecture as to whether the Small Business Restructure Roll-over relief would also be restricted by the $2 million aggregated turnover threshold. Any doubts that this lower threshold would be retained for the small business restructure roll-over have now been removed with the introduction of the Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016 into the House of Representatives on 1 September 2016. This is consistent with the operation of the roll-over relief as a deferral of tax rather than an exemption from tax and it is appropriate that small business entities should benefit from the higher $10 million turnover test. 

In addition to the Small Business Restructure Roll-over the Government has identified the following small business measures that will benefit from the new $10 million aggregated turnover test:

• immediate deductibility for small business start-up expenses;
• simpler depreciation rules;
• simplified trading stock rules;
• immediate deductions for certain prepaid business expenses;
• accounting for goods and services tax (GST) on a cash basis;
• annual apportionment of input tax credits for acquisitions and importations that are partly creditable;
• paying GST by quarterly instalments;
• fringe benefits tax (FBT) car parking exemption; and
• Pay As You Go (PAYG) instalments based on gross domestic product (GDP) adjusted notional tax.

The small business income tax offset is not included in the list above. A modified aggregated turnover test of $5 million applies for the offset. The small business CGT concessions in Division 152 are unchanged and retain the $2 million aggregated turnover or $6 million net asset test thresholds.

If passed by Parliament, the amendments to the turnover threshold will apply to the Small Business Restructure Roll-over relief from its commencement on 1 July 2016.

For more information please contact:

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