They can also immediately deduct the balance in the small business pool if it is less than $20,000 at the end of an income year ending on or after 12 May 2015 to 30 June 2017 (including an existing pool).
The cost of an asset includes both the amount you paid for it and any additional amounts you spent on transporting and installing it ready for use.
If you are registered for the goods and services tax (GST), you exclude the GST amount you paid on the asset when you calculate your depreciation amounts (and your instant asset write-off threshold is $20,000 exclusive of any GST).
If you are not registered for GST, you include the GST amount you paid on the asset in your depreciation calculations (and your instant asset write-off threshold is $20,000 inclusive of any GST).
COMPANY TAX CUTS FOR SMALL BUSINESS
The small business company tax rate reduced from 30% to 28.5% for income years commencing on or after 1 July 2015. This lower rate also applies to small businesses that are corporate unit trusts and public trading trusts.
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.
The company tax rate remains at 30% for all other companies that are not small business entities.
IMMEDIATE DEDUCTIONS FOR START-UP COSTS
As of 1 July 2015, small businesses can immediately deduct a range of start-up expenses, including professional, legal and accounting advice and government fees and charges.
SMALL BUSINESS INCOME TAX OFFSET
From 2015–2016 income year, an individual is entitled to a tax offset of up to $1,000 on the tax payable on their total net small business income, which is their:
• net small business income from sole trading activities; and
• share of net small business income from a partnership or trust.
Eligible individuals need to work out their total net small business income. The Australian Taxation Office (ATO) will work out your offset based on the total net small business income reported in your income tax return.
NET MEDICAL EXPENSES TAX OFFSET PHASE-OUT
As of 1 July 2015, the offset can only be claimed by taxpayers with net expenses for disability aids, attendant care or aged care. The offset is income tested and will be abolished from 1 July 2019.