Are you a small business owner who is considering a business structure change that is better suited for your growing business and are you interested in knowing what new tax concessions are available? There were certain concessions announced by our treasurer for the 2016’s budget to facilitate your small business operations. One of the important announcements for small business was the Small Business Restructure Roll-over.

1. Small Business Restructure Roll-Over

For the 2015-16 budgets, the government announced that as part of the Growing Jobs and Small Business package, that a Small Business Restructure Roll-over would be introduced with the aim for small businesses to be able to change their legal structure easily and without incurring a tax liability, allowing small business owners to focus on the growth of their business. This tax law amendment has received royal assent recently on the 8th of March 2016.

Up until this change, where a business owner needed to transfer business assets from one entity to another during the restructuring phase, this would incur capital gain tax liability and was also only available for individual sole traders, partnerships and trusts that converted to a company structure.

With the introduction of the new roll-over, this will now allow small business owners to have greater flexibility in choosing the most suitable structure for the business without incurring an income tax liability and not having to worry about the negative effect it may have on their cash flow.

What is the new roll-over and what will it do
The new roll-over will disregard any gains or losses which could arise during the transfers of business assets between entities during the restructuring phase which is now available for transfers of assets from a company to sole traders, partnerships or trusts. However this does not apply to exempt entities or superannuation funds.

Who is eligible?
To be eligible for the roll-over, the entity must fall under the description of a ’small business entity’ in the income year where the transfer has taken place. It must also satisfy the ‘small business entity’ test in which the aggregate turnover for the income year was less than $2 million, or that the combined net asset value with the connected entities, is less than $6 million.

What is included?
Active assets will now include CGT assets, trading stock, revenue assets and depreciating assets as long as the following applies
– The change in structure does not result in the change in ownership of the asset and as long as the transfer was made on or after 1 July 2016.
– The transferor chooses to apply for the roll-over
– No consideration is provided
– That it is not an exempt entity or a complying superannuation entity
In addition to the above small business owners are now exempt from certain Fringe Benefits Tax (FBT) liability.

2. Fringe Benefits tax changes for work related device

Small businesses providing electronic equipments to employees for them to perform their job will not attract a fringe benefits tax on such payments. This becomes a part of the employee’s wages and hence adds up to their taxable income or a salary package decided in advance. These electronic devices can be mobile phones, laptops or even GPS devices to work outdoors. This also means that such payments made to employees will be deductible by small businesses as operating expense.

3. Accelerated depreciation for primary producers

Consideration is also given to primary production business activities by allowing them to deduct the cost of certain assets completely and immediately in the same financial year when the expense is incurred rather than claiming it gradually over a lengthier period of time. For instance, this can be the cost incurred in erecting a fence for the farmland where the business activity is carried out. The water facility arrangement that also includes the irrigation system established is deductible in a similar way instead of claiming it over a period of 3 years. Likewise, the storage costs also can be deducted over 3 years time and not 50 years as previously applied.

4. Simpler depreciation for non – primary business activities

A major attraction for non-primary business activities is the immediate asset write off rule. In simple words, any business asset like machinery, equipment, motor vehicle or similar equipments used or made ready for use can be straight away written off in the same financial year of purchase. This event of purchase should fall in between 12 May 2015 and 30 June 2017. Businesses can have multiple assets under the price of $20,000 and avail this tax benefit.

5. Company tax cut for small businesses

There is also tax rate reduction for small business (turnover less than 2 million) operating under a company structure, wherein the tax rates have been reduced to 28.5% instead of the 30% flat rate. This reduction does not affect the existing maximum franking credit rate of 30%.

6. Small business income tax offset

A new attractive new concession has been announced for small businesses that have partnership, trust or sole trading arrangement to operate, where an individual tax payable will be offset against the income that is derived from any such business arrangement to the extent of the following whichever is lower in amount:
• 5% of the individual’s SBE income tax liability, or
• $1,000.

7. Deduction for professional expenses for start-ups

Among the various deductions and concessions a new business start up can claim, there are certain costs like professional fee including accountant’s fee and lawyer’s fee that are also eligible for deductions straight away. Government fee which is also part of registrations is deductible.

(This article is accompanied by a disclaimer, to avail a full copy of this, please contact A One Accountants by calling 03-86091889 and emailing us at

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