The Government has sealed a deal with Senate cross benchers to pass the small business and company tax reforms proposed in the 2016/17 Federal Budget, with some amendment.


The deal will see the company tax rate for businesses with an annual turnover of up to $50 million cut from 30% to 25% over the next 10 years.

The Coalition passed the first tranche of its reforms on Friday night after an extended Senate sitting. The reduction in company tax rate is summarised as follows:

Current Rates2016-172017-182018-19
Less than $2m28.5%27.5%27.5%27.5%
Less than $10m30%27.5%27.5%27.5%
Less than $25m30%30%27.5%27.5%
Less than $50m30%30%30%27.5%
Greater than $50m30%30%30%30%


In addition to the reduction in company tax rates, the reforms also amend the definition of a small business entity and increase the aggregated turnover threshold from $2 million to $10 million opening the door for thousands of business to access the small business entity concessions.

We have listed below the main concessions that offer some excellent tax planning opportunities in the lead up to 30th June 2017 and beyond. This list does not include all available concessions.

$20K small business asset write off

This is a great bonus for businesses in the $2m to $10m turnover range. Small business entities can immediately deduct most business assets if they cost less than $20,000 instead of depreciating these assets over their effective lives (usually many years).

You will need to get in quick as this concession expires on 30th June 2017.

Prepayments write off

Small businesses can claim an immediate deduction for prepaid expenses where the payment covers a period of 12 months or less that ends in the next income year. Normally business are required to spread out these prepaid expenses over the period to which they relate.

For example, prepaying the next 12 months insurance premiums can be claimed in the year in which the expense in paid.

Small business restructure rollover

From 1 July 2016, small businesses can change the legal structure of their business without incurring any income tax liability when active assets are transferred from one entity to another.

It is important to note that the increase in the turnover threshold does not apply to the eligibility rules for accessing the small business capital gains tax (CGT) concessions. The threshold for accessing the CGT concessions is unchanged at $2 million.

To find out more or how the changes will impact on your business contact our office on 07 3831 1055.


DISCLAIMER: The information on this website and the links provided are for general information only and should not be taken as constituting professional advice from Hall Browns Accountants. You should consider seeking the appropriate legal, financial, or taxation advice to check how the website information relates to your unique circumstances.


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