The Six Elements of The Small Business Enterprises Tax System (SBE)
As small business accountants, we see many business enterprises in the local Caulfield, Glen Waverly and Malvern areas and we think that many will be keen to be aware of the alternative methods that a small business can adopt to report their taxation affairs under the The Small Business Enterprises (SBE) tax system.
It can apply to all business structures (i.e. companies, partnerships, fixed and non fixed trusts and sole proprietors), who satisfy the eligibility criteria (see below) but excludes self managed super funds.
This system was designed to reduce the tax paid and the compliance costs faced by small businesses.
Most depreciating assets costing less than $1,000 each are written off immediately. Most other assets are pooled and deducted at a rate of either 30% or 5% depending on effective life.
Businesses only need to conduct a Stocktake and account for changes in the value of trading stock in limited circumstances.
A full deduction is available upfront for certain prepaid business expenses (i.e. generally up to 12 months e.g. insurance, interest, rent).
The “Cash Basis” of reporting/remitting GST to the ATO may be adopted (see Article: Goods & Services Tax (GST)).
Various elections may be applicable to either defer or exempt Capital Gains Tax (CGT) applying to the disposal of Active Business assets (see Article: Capital Gains Tax Small Business Concessions).
The period of time available for either the ATO or the taxpayer to amend prior periods assessments is reduced from four (4) years to two (2) years.
ELIGIBILITY CRITERIA - $2 MILLION AGGREGATED TURNOVER TEST
To be eligible the following tests must be met:
Aggregated turnover is the sum of business turnover plus the turnover of any entities that the business is connected or affiliated with.
Contact Hillyer Riches Accountants in Caulfield today for further advice.
This article is for general information only and should not be relied upon without first seeking advice from an appropriately qualified professional.