Your business may be missing out on tax concessions

In this tax snapshot National Tax Director Roelof van der Merwe, and Senior Tax Advisory Manager John Manjariotis, provide a brief overview of some of the tax concessions available for businesses, especially those businesses operating in the Small and Medium Enterprise (SME) space.

Does your business qualify for any tax concessions?

Governments often use tax policy to stimulate business activity, innovation and entrepreneurship. Businesses carried on by individuals, companies, trusts, or by any of these entities as a partnership, may be entitled to a wide range of tax concessions.

But as with most things in tax, the devil is in the detail, and these concessions can only be claimed if specific conditions are met. That’s where your Findex adviser can become your best friend (if they aren’t already) to help you make use of these concessions.

It’s worth noting that these concessions are complicated and if a business is eligible to use it but does not, the business may lose it forever. On the other hand, claiming a concession incorrectly can result in unexpected tax and penalties for the business.

Understand some tax concessions available for the 2020 income tax year

As a starting point, the type of concessions a business is entitled to depends on the amount of turnover of the business.

The concessions can:

  • Reduce the CGT exposure on the sale of a business;
  • Entitle the business to a whole raft of concessions; or
  • Reduce the amount of tax payable by the business that is a company to only 27.5%.

In the SME space, there are a number of clear turnover thresholds. Available concessions include:

Tax Concessions.png

A business that qualifies for one concession can also qualify for the other concessions provided the concession specific conditions are met.

For example, a company with a turnover of $1.5 million can potentially qualify for:

  • a lower tax rate (i.e. only pay company tax at 27.5%) - because the turnover is less than $50 million;
  • CGT concessions on the sale of the business (because the turnover is less than $2 million); and
  • a whole raft of other tax concessions (because the turnover is less than $10 million).

How can Findex help you?

If anything in this tax snapshot triggered your interest, or you are (or know someone) that may need tax assistance, please contact your Findex adviser. Your local adviser can help you identify potential opportunities that may be available for you or your business while at the same time help you to manage your exposure to different risks.

[1] s328-180(4)(c)(i) & (ii) & s328-180(6)(c)(i) & (ii) of the Income Tax (Transitional Provisions) Act 1997

[2] s40-82(1)(c)(ii) of Income Tax Assessment Act 1997

[3] s40-425(7A) of the Income Tax Assessment Act 1997