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Small Business Year End Bonus

Check eligibility for small business tax regime

Small businesses (sole traders, partnerships, companies and/ or trusts with a turnover of less than $2 million) may be eligible for a range of tax benefits including immediate write off of assets costing less than $20,000, a 28.5 per cent company tax rate, simplified depreciation, capital gains tax concessions and accounting on a cash basis.

These measures have now been extended to businesses with a turnover of less than $10 million with the notable exception of the CGT Small Business Concessions.

Maximise depreciation deductions

Small businesses can get an immediate tax deduction for nearly all individual assets purchased costing less than $20,000, to the extent such assets are used for an income producing purpose and is installed ready for use by the end of the financial year. This measure was due to expire on 30 June 2017 but has been extended to 30 June 2018.

For businesses registered for GST, the $20,000 threshold is calculated on a GST-exclusive basis, but for businesses not registered for GST, the threshold is calculated on a GST-inclusive basis.

Review salary sacrifice arrangements

Employees can consider salary sacrifice arrangements under which their gross salary may be foregone to obtain either a packaged car for fringe benefits tax (FBT) purposes, or they can make additional superannuation contributions.

Make trust resolutions by 30 June

Trustees of discretionary trusts are required to make and document resolutions on how trust income should be distributed to beneficiaries for the 2016-2017 financial year by 30 June.

In the event a valid distribution is not made then a default beneficiary may be assessable. If there are no default beneficiaries, then the trustee will be assessable at the highest marginal rate.

Write of Bed debts

Businesses can only obtain income tax deductions for bad debts. If the debt still exists at the time it is written off. Thus, if the debt is forgiven or compromised before it is written off as bad in the accounts no deduction will be available. The debt must also be unrecoverable and written off in the accounts as bad prior to 30 June.

The bad debt must have been previously brought to account as assessable income or lent in the ordinary course of carrying on a money-lending business.

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