Standardizing small business tax benefits

What is a "small business"? Under different laws. a small business is defined by either its number of employees, asset size or turnover volume.

The Tax Laws Amendment (Small Business) Bill 2007 which passed through the Senate on 13 June, will standardise the eligibility criteria for small business tax concessions from 1 July 2007.

Under the new legislation, small businesses will only have to apply one eligibility test relating to the size of the business (ie aggregated annual turnover of less than $2 million), to access a range of small business concessions.

These concessions are:

• CGT 15-year asset exemption
• CGT 50 per cent active asset reduction
• CGT retirement exemption
• CGT roll-over provisions
• simpler depreciation rules
• simplified trading stock rules
• immediate deductions for certain prepaid  business expenses
• choice to account for GST on a cash basis
• annual apportionment of input tax credits for  acquisitions and importations that are partly creditable
• choice to pay GST by instalments
• FBT car parking exemption
• PAYG instalments based on notional tax.

Existing eligibility thresholds for accessing CGT, FBT and  PAYG instalments concessions will be retained.