There is a new kid in town. His name is Base Rate Entity. Guess what - he doesn’t replace the other definitions or acronyms because this is a new definition for small business. Buckle up and I’ll try to explain it:
Base Rate Entity (BRE) - applies from 1 July 2017
If your turnover is less than $25 million then you are an BRE. If you qualify, this is what you’re entitled to:
- simpler depreciation and a $20,000 immediate tax write off
- a company tax rate cut (but only if you’re conducting a business) of 27.5%
- if you’re a primary producer - immediate deduction for fences and a three year write-off for fodder storage assets
- immediate write-off for the expenses incurred to start a business
- rollover relief if you change business structure
- simplified trading stock rules if your stock value does not vary by $5,000 from year to year
- an immediate write-off for prepaid expenses where the payment covers the 12 month period
- and my favourite - a two year amendment period from the time the Commissioner issues an assessment
- GST accounting on a cash basis (note, cash basis accounting only applies to GST and not income tax)
- annual apportionment of GST where you can claim the full amount of GST on private purchases and make an adjustment at the end of the financial year
- fringe benefits tax (FBT) concession for multiple tax-deductible devices provided to employees
- super concessions which enable you to use the small business clearinghouse
Unfortunately, the BRE definition does not apply to the small business capital gains tax exemptions. This was a benefit provided to small businesses where they could effectively sell their business either tax-free or substantially tax-free. The turnover remains at $2 million for this concession.
For further details contact Dene Kilpatrick