What can Small Business Owners Expect? Tax Changes for Small Businesses 2016 – Parramatta
At Key Business Accountants, we understand that every business has a unique set of tax requirements and financial objectives, and we love helping Small Business Owners to achieve their goals. Providing tax services to the Parramatta and surrounding areas, we can assist you with your business tax return lodgement, as well as offer expert advice.
Some tax changes for Small Businesses have been implemented for the Financial Year ending June 30 2016 and into the next year. These could affect how and what you can claim on your business tax return, and at Key Business Accountants, we can assist you to understand and manage these changes.
Tax Changes for Small Businesses 2016 include:
Instant asset write-off and simplified depreciation rules
If your Small Business makes an aggregated annual turnover of less than $2 million, you can choose to use the simplified depreciation rules and claim against certain assets.
This only applies to Small Business that meet the following thresholds and standards; please always consult your Accountant for more detailed advice in relation to your business situation.
- If the asset is purchased between 12 May 2015 and 30 June 2017, and costs less than $20,000, you may be able to claim a majority of the expenses back on your tax return. Each asset that costs less than $20,000, whether it is new or second-hand, can be claimed for deduction in the year the asset was first used or installed.
- You may be able to combine other depreciating assets that cost $20,000 or more in a Small Business Asset Pool and make a claim. This includes:
- A 15% deduction in the first year (regardless of when you purchased or acquired them during the year)
- A 30% deduction each year after the first year
- You may be able to write-off the balance of your Small Business Asset Pool at the end of the income year if the balance, before applying any other depreciation deduction, is less than $20,000.
Immediate deductions of professional expenses for Start-up Businesses
From 1 July 2015, Small Businesses are entitled to certain deductions when starting up a new small business. The range of deductible start-up costs include; professional, legal and accounting advice, and government fees and charges. Expenses can only be immediately claimed if the entity that incurred the expenditure is a Small Business entity for that income year.
2a. Start-up Businesses may be able deduct expenses related to:
Professional advice or services
This can include:
- Advice on how the business should be best structured
- Setting up legal arrangements or business systems for the structure
- The operation of the proposed business, such a business development plan
- Cost associated with raising capital for debt or equity for the operation of the propose business
- Payments to Australian government agencies
For example, this could include; the fees for creating a company, stamp duty for transferring assets to the entity which is intended to carry on the proposed business.
2b. The expenses that you will not be able to deduct include:
- The cost of acquiring the assets, such as delivery fees
- The direct costs of the capital itself, such as internet, dividends, or capital repayments
- Expenses you may incur for carrying out the proposed business activity; such as travel costs while assessing locations for a business
- Expenditure relating to taxes of general application, such as income tax, as these taxes are related to the operation and activities of the business
2c. Non-commercial Loss Provisions
If the Start-up has a net loss that includes costs from setting up or ceasing a business from business activities (commonly known as a “black hole” expense), the black hole expense may be deferred to a later year by the non-commercial loss rules.
Small Business Restructure Rollover
From 1 July 2016, Small Businesses will be able to change the legal structure of their business without incurring any income tax liability, when active assets are transferred by one entity to another. Active assets including CGT assets, trading stock, revenue assets and depreciating assets used, or held ready for use, in the course of carrying on a business.
Small Business Income Tax Offset
From the 2015-2016 income year, an individual is entitled to a tax offset on the tax payable on the portion of their income that is from:
- Net small business income from sole trading activities
- Share of net small businesses income from a partnership or trust
Know what you can claim this Tax Season and get the best possible result for your Small Business Tax Return.
For more information or to make an appointment, please call us on 1800 979 888