What are Some of the Tax Incentives for Small Businesses in Australia


Running any kind of business is hard work. Small businesses are even more difficult to run profitably because the owner has to put many hats to ensure business operations run smoothly. They could be in charge of operations, marketing, sales, product development while still owning and driving the business vision.

Fortunately for many Australian small business owners, there are numerous tax deductions and government incentives for small businesses that are designed to ease the burden of small business management and ensure that all the hours that you put in keeping your business afloat are financially rewarding. Below is an overview of some of the tax incentives that you can leverage as a small business owner in Australia:-

Redefining the “Small Business”

The Australian Taxation Office (ATO) has made changes in the definition of a small business. Currently, a small business refers to any business with an annual turnover of less than $10 million. In the past, this was pegged at $2 million. This has widened the net on the range of businesses that can be classified as “small” and which can benefit from a myriad of tax concessions and government incentives.

The Instant Asset Write-Off

If you are running a small business and planning to purchase an asset that costs less than $20,000, you can benefit from the instant asset write-off. By using the simplified ATO depreciation rules, it is possible to claim deductions immediately or over a period of time if you pool together all the business costs and claim a percentage every year over an extended period of time.  If the balance of costs in your small business pool is less than $20,000, you can claim the deductions immediately.

Leveraging the Small Business Concessions

Small businesses are eligible for a wide spectrum of business concessions. These include the Pay-As-You-Go (PAYG) installment concessions. There is also the accelerated depreciation that is applicable for primary producers as well as deductions for professional expenses that are incurred when starting up. If your small business has a turnover of less than $5 million, the business will also qualify for an income tax offset. Businesses in this category can also qualify for the unincorporated small business tax discount.

Small businesses are also eligible for a simpler business activity statement (BAS) system as well as excise concessions. If you are running a small business with an annual turnover of less than $10 million, you are allowed to pay your GST in installments and you can also use a cash basis accounting.

PaTH Incentives

Small businesses in Australia can be incentivized if they trial young jobseekers through the PaTH Programme. PaTH stands for Prepare-Trial-Hire. Under this program, a business receives an upfront $1000 if they hire a government-trained intern for a duration ranging from four to twelve weeks.

The business will subsequently receive wage subsidies that can amount to up to $10,000 if they hire a young person under the age of 25 who is facing certain employment barriers. This subsidy is paid over a period of 6 months. The business can also receive $6500 in subsidies, paid over duration of six months, if they hire a jobseeker that is job-ready.

Lower company tax rates

Small businesses in Australia now pay a lower company tax rate of 27.5%. The Australian Taxation Office has also revised the eligibility turnover for businesses in this category to an annual turnover of $25 million for 2017/2018. This has further widened the net of the range of businesses that can benefit from this small business tax incentive.

Want to learn more about the various tax concessions that your small business might be eligible for? Talk to an accounting firm Melbourne service today and receive all the information you need. You can also call accountant Melbourne small business tax specialists for consultations.

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