Standardising of Small Business Concessions

On the 13th of November, the Minister for Small Business, Fran Bailey, announced that the Government will implement legislation to standardise the eligibility criteria for small business tax concessions. This new legislation will take effect from July 1st next year. As of this date, businesses that turn over less than $2 million per annum, will be able to access the Government Services Tax (GST), Simplified Tax System (STS), capital gains tax (CGT), fringe benefits tax (FBT) and pay-as-you-go (PAYG ) small business concessions.

It should also be noted that small businesses that already have access to CGT, FBT or PAYG concessions, will not lose out under the new arrangements.

How does this change in legislation affect you?

At present there are 5 different small business tests, when the new legislation takes place there will be only one eligibility test that small businesses have to apply for. By doing this, the Government believes that it is helping to reduce the red tape and compliance costs for small business.

Click on the image to see a larger version

The diagram above outlines the current system versus the new small business framework. It also outlines the concessions that small businesses would be eligible for.

Who does this change is legislation affect?

It is estimated that this single business structure will result in reduced compliance costs for nearly 2 million Australian businesses. Businesses that already have access to the CGT, FBT or PAYG small business concessions will not lose out on under the new legislations if they turn over more than $2 million per annum, as they can apply for eligibility under the existing criteria.

Like to know more?

At present, not a great deal of information is available on these legislative changes. Early in 2007, the Government will be consulting publicly on the draft legislation, and more information will be available then.