5 tax tips for small businesses – Small business income tax offset

A few tips that small businesses should consider when preparing their tax returns are:

1. Check if you are applying the correct company tax rate;
2. Check if you are entitled to the small business income tax offset;
3. Check if you are entitled to a small business CGT concession;
4. Ensure that deductions are only claimed for business (not personal) expenses; and
5. Keeping the right records to support your claims.

 

Small business income tax offset

The small business income tax offset can reduce the tax you pay by up to $1,000 each year.

To be eligible, you must be carrying on a small business as a sole trader or have a share of net small business income from a partnership or trust. The ATO has published the following table outlining the relevant turnover thresholds.

Income year Aggregated turnover threshold Rate of offset Maximum offset
2015–16 $2m 5% $1,000
2016–17 to 2019–20 $5m 8% $1,000
2020–21 $5m 13% $1,000
2021–22 and onwards $5m 16% $1,000

 

When determining whether you are entitled to the small business income tax offset, you need to determine your aggregated turnover.

Your aggregated turnover is generally your annual turnover plus the annual turnover of any business connected or affiliated with you.

 

For more information on determining your eligibility and how to claim, visit this link – https://www.ato.gov.au/

 
3. small business CGT concession >

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