SMALL BUSINESS ENTITY

If your turnover is less than two million dollars, you would be classed as a small business entity (SBE). As such you would be able to access a number of small business concessions. An SBE is able to use simplified depreciation rules which allow for a full deduction of the whole cost of depreciating assets costing less than $1,000. Most other assets are pooled and depreciated at a higher (accelerated) rate than that otherwise available. Businesses that are SBE's or have a net asset value of less than $6 million can also benefit from certain capital gains tax concessions.

An Entrepreneur's Tax Offset may also be available to eligible small business entities whose gross turnover from the business is less than $75,000. However, from 1 July 2009 an additional income test had to be passed. This test applies to taxpayers who also earn income from non-business sources.

The Government also announced an instant tax write-off for the first $5,000 of any motor vehicle purchased by Australian small businesses after 1 July 2012. The remainder of the purchase price can be transferred into a general small business depreciation pool. This will affect the timing of acquisition of many new cars next year. The Government's existing small business tax reform announced in last year's budget includes an immediate write-off of assets valued under $5,000, a write-off of other assets in a single pool at 30% and a reduction in company tax rate to 29% for small business. These new upfront deductions will replace the Entrepreneurs Tax Offset in the 2012-2013 tax year.

INVESTMENT ALLOWANCE

The investment allowance finished up in the 2010 income year. If you qualified as a small business entity and you committed to buy that piece of equipment between 13 December 2008 and 31 December 2009, you may have been eligible. It should have been used mainly in the running of a business in Australia and be first used or installed ready for use by 31 December 2010. In addition it must have cost at least $1,000. If you meet all of those conditions you will have been able to claim 50% of the cost on your tax return in the year that it was first used or installed ready for use.

In the 2012-2013 income year an instant tax write-off will be available for the first $5,000 of any motor vehicle purchased by Australian small businesses with the remainder of the purchase price being transferred into a general small business depreciation pool. They are also introducing an immediate write-off of assets valued under $5,000 as an aid to cash flow for small business.

FULE TAX CREDIT

From 1 July 2008 most businesses will be able to claim fuel tax credits for running machinery, plant, equipment and heavy vehicles used in running that business. To be eligible to make a claim the business must be registered for GST and the claim should be made on the Business Activity Statement that is required to be lodged. The amount that can be claimed will depend on the type of fuel and what it is used for. Fuel tax credits are not available where alternative fuels (e.g. LPG) are used.