Small businesses (sole traders, partnerships, companies and/ or trusts with a turnover of less than $2 million) may be eligible for a range of tax benefits including immediate write off of assets costing less than $20,000, a 28.5 per cent company tax rate, simplified depreciation, capital gains tax concessions and accounting on a cash basis.

Broadly, the small business must carry on a business and its annual turnover (excluding GST) cannot exceed $2 million. Turnover will also be aggregated to include the annual turnover of certain affiliates and entities connected with the taxpayer.

While meeting the $2 million turnover test automatically entitles small businesses to choose certain concessions such as simplified rules for both tax depreciation and trading stock, it is important to note that additional eligibility tests apply to claim the small-business CGT concessions.

The government has proposed increasing the annual small business threshold to a turnover of $10 million from 1 July 2016. This would normally create a number of year-end tax planning opportunities for businesses with an annual turnover of between $2 million to $10 million, however at the time of writing it is uncertain whether this proposed increase will become law, therefore we suggest that taxpayers be circumspect.