Adrian De Vito
April 2016 Comprehensive Update
Small Business Entity Reminder
Instant asset write-off < $20,000 – Small businesses can immediately deduct the business portion of most (new or secondhand) assets if they cost less than $20,000 and were purchased between 7:30pm on 12 May 2015 and 30 June 2017.
Deductions for professional expenses for start-ups
From 1 July 2015, small businesses are entitled to certain deductions when starting up a small business.
The range of deductible start-up costs includes professional, legal and accounting advice, and government fees and charges.
Small business restructure roll-over
From 1 July 2016, small businesses will be able to change the legal structure of their business without incurring any income tax liability when assets are transferred by one entity to another.
This roll-over basically applies to:
trading stock; and
depreciating assets used, or held ready for use, in the course of carrying on a business.
Small business income tax offset
From the 2015/16 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; and/or
their share of net small business income from a partnership or trust.
The ATO will work out the offset based on the total net small business income reported in a client's income tax return.
Company tax cut for small businesses
For income years commencing on or after 1 July 2015, the small business company tax rate has been reduced from 30% to 28.5%.
The maximum franking credit that can be allocated to a frankable distribution is unchanged at 30%, even if a small business is eligible for the 28.5% tax rate.
SMSF's - ATO sounds warning to super funds with 'collectables'
The ATO is warning trustees of SMSFs who hold investments in collectables* or personal-use assets*, acquired before 1 July 2011, that time is running out for those items to be transferred out of the fund under the old rules.
Basically, collectables and personal use assets are things like artworks, jewellery, vehicles, boats and wine. Investments in such items must be made for genuine retirement purposes, not to provide any present-day benefit.
ATO releases latest business benchmarks
2013/14 data is now available for the 'Small business benchmarks'.
The ATO uses these benchmarks as a guide on industry trends to identify businesses that may be avoiding their tax obligations by not reporting some or all of their income.The ATO says that using the Small business benchmarks can assist with building taxpayers' businesses.
They say that taxpayers should compare their details against similar businesses in their industry and see how competitive they are or where improvements can be made.
Give us a call & we will help you find the benchmarks for your industry
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should give us a call to independently verify the interpretation and the information’s applicability to your particular circumstances.