Concessions for small business entities – overview
Small businesses with an aggregated turnover of less than $2 million have been called small business entities and have been eligible, subject to conditions, for a range of tax concessions.
Small business tax break
You can claim a tax deduction of 100% of the cost of eligible new assets costing $6,500 or less.
You can claim an initial accelerated tax deduction of $5,000 for the cost of motor vehicle purchase during the year; this is in addition to deductions available under the simpler depreciation rules or the normal depreciation rules (uniform capital allowances).
Simpler depreciation rules
Generally, you can pool your assets to make depreciation calculations easier and also claim an immediate deduction for most assets costing less than $6,500 each.
Capital gains tax (CGT) 15 year asset exemption
If you are aged 55 or older and retiring, and your business has owned an asset for at least 15 years, you won’t pay CGT when you sell the asset.
CGT 50 per cent active asset reduction
If you’ve owned an asset to conduct your business (an ‘active asset’) you’ll only pay tax on 50% of the capital gain when you sell the asset.
CGT retirement exemption
There is a CGT exemption on the sale of a business asset, up to a lifetime limit of $500,000. If you are under 55, money from the sale of the asset must be paid into a complying superannuation fund or a retirement savings account.
If you sell a small business asset and buy a replacement, you can roll over your CGT liability, to the value of the replacement asset. This means you won’t pay any CGT owing until you sell the replacement asset.