Small Business Taxation

Small Business Taxation cannot be ignored. Company directors are now personally liable for company tax liabilities, including pay-as-you-go (PAYG), withheld amounts and superannuation guarantee charges (SGC).


The Statistics

In May last year Galaxy Research, on behalf of American Express, conducted a nationwide survey of more than 1,000 small business owners with alarming results. According to the survey, some common misunderstandings amongst owners surveyed included:

  • 50% of small business owners do not understand the write-offs that home-based businesses can claim for equipment purchases.
  • 40% are unaware of the tax-breaks for asset purchases under $6,500.
  • 65% of small business owners mistakenly believe that businesses with a turnover greater than $50,000 are required to register for GST. (The threshold changed to $75,000 in 2007).
  •  46% of small business operators incorrectly believe they can claim $300 worth of deductions without receipts.

If you are operating a business in Australia, you are responsible for complying with various ATO requirements. To meet these requirements you will need to apply for certain registrations. You must report income and keep business records. It is also important that you understand which business expenses you can claim, and take advantage of all available tax concessions.

Having a good understanding of basic tax issues will allow you to legitimately minimise your tax bill and avoid penalties. ABA is a registered Tax Agent with a team of certified accountants who specialise in small business taxation. Our business tax services are not just about filling out forms. Our goal is to make sure that you are compliant with all relevant rules and regulations, and up to date with any changes. We ensure you take advantage of all available deductions and we help you plan ahead for the future.

  • Tax Returns (Company, Individual & Trusts)
  • Financial Reporting
  • Depreciation Schedules
  • BAS Reconciliation & Lodgement of Activity Statements
  • Withholding Obligations & Payment Summary Preparation
  • Record Keeping Obligations
  • Facilitate Dealings with the Commissioner
  • Advice and Information
  • New Company Set-ups

Thinking about selling your business?

Running a small business is tough. You put your heart and soul (and many years of hard work) into it, so you deserve to get the best reward when you sell. Fortunately, some significant Capital Gains Tax (CGT) concessions may be available to help you achieve the best after-tax sale result.

The value of these concessions can have a major impact on the after-tax sale value of your business so despite the complexity it is worthy of investigation. If you are not eligible or choose not to take advantage of these concessions, you may still be eligible for the general CGT discount.

There are four small business CGT concessions available:

  • Small Business 15-year Exemption
  • Small Business Retirement Exemption
  • Small Business 50% Active Asset Reduction
  • Small Business Rollover

To be eligible for these concessions, the taxpayer must, along with related entities:

  • have an annual turnover of less than $2 million and run a business, or
  • have net assets of less than $6 million excluding the family home and any superannuation benefits.

The asset must also pass the ‘active asset test’. This test requires the CGT asset to be an active asset for:

  • 7½ years, if owned for more than 15 years, or
  • half of the period of ownership if owned for 15 years or less.

Importantly, it does not have to be used in the business at the time the asset is sold. There are also modified time periods for:

  • CGT assets acquired or transferred under the rollover provisions relating to assets compulsorily acquired, lost or destroyed, or those relating to marriage breakdown, and
  • assets sold after the business had ceased.

This outline is by no means exhaustive of the regime in every situation. There are a wide variety of circumstances and structures to be considered.

Strategic Exit Planning is vital to ensure your properly positioned to take advantage of the CGT Concessions available to your small business.

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