Small business taxation

One important benefit is an immediate tax deduction for each capital item a small business purchases for business-related use, up to a cost of $20,000 per item.

Another benefit is the reduction in a small business entity company tax rate from 30 per cent to 27.5 per cent.

You are considered a small business entity by ATO standards if you have less than $10 million in annual turnover.

Small businesses can have a variety of different tax structures in place, so there is no general rule on how much tax a small business will pay. The tax you pay as a small businesses will vary if you are under a trust, company, or partnership structure.

The deductions that any small business can claim varies from business to business. Each industry has specific expenses that relate to earning assessable income.

Under Section 8-1 of the Income Tax Assessment Act 1997, is specifies that you “can deduct from your assessable income any loss or outgoing to the extent that it is incurred in carrying on a business for the purpose of gaining or producing assessable income”.

Any business operator will need to consider registering for GST once they estimate that within any income tax year they will be exceeding $75,000 in annual turnover.