Here is our round-up of the latest small business tax news, featuring the following: 

  • Small business income tax offset
  • Instant asset write-off
  • Taxable payments reporting system
  • Single touch payroll
  • Rental properties and travel expenses 

Don't forget about the small business income tax offset

If you run your business as a sole trader, or receive a share of small business income from a trust or partnership, don't forget you may be able to save up to $1,000 on your tax bill by claiming the small business income tax offset. The offset is worked out based on the proportion of income tax payable on your business income. 

Your business aggregated turnover must be less than the relevant threshold – see the following table:

Income year(s) Aggregated turnover threshold % Rate of offset Maximum offset amount
2016 $2,000,000 5% $1,000
2017-2020 $5,000,000 8% $1,000
2021 $5,000,000 13% $1,000
2022 $5,000,000 16% $1,000

Note! You cannot claim the small business income tax offset if you run your business through a company. Speak to us about what other small business tax concessions you may be eligible for.

Instant asset write-off for small businesses extended and increased

Small businesses will get an extra tax break following the recent announcement by the Government that the instant asset write-off scheme will be extended to 30 June 2020 for assets purchased under $25,000 in value.

Small businesses will be able to immediately deduct assets costing less than $25,000 instead of claiming deductions over a number of years. The new increased threshold of $25,000 applies from 29 January 2019 (instead of $20,000). There is no limit on how many assets can be claimed.

Tip! A helpful tip from the Australian Small Business and Family Enterprise Ombudsman, Kate Carnell: "Small and family businesses need to remember that this is a tax deduction, not a rebate. So you need to have sufficient profit to write off the new asset against." 

Taxable payments reporting system expanding 

The Taxable payments reporting system (TPRS) is slowly being expanded to cover more and more industries. It first started with the building and construction industry and from 1 July 2018 also includes contractors that provide courier and cleaning services. Businesses that make payments to contractors in these industries will need to lodge their first annual report by 28 August 2019. 

The ATO has issued some guidance (LCR 2018/8) on how these rules will apply. We will be able to assist you to meet your reporting obligations. 

In late November 2018, legislation was passed to further expand the TPRS to contractor payments in the following industries:

  • security providers and investigation services;
  • road freight transport; and
  • computer system design and related services.

Businesses will be required to lodge their first annual report for payments in these industries by 28 August 2020.

The ATO has issued some digital resources, fact sheets and webinar recordings to assist taxpayers to understand their reporting obligations. However, please contact us should you require any assistance. 

Single Touch Payroll

Smaller employers – when to use Single Touch Payroll

If you are an employer with 19 or less employees, you should consider switching to reporting through Single Touch Payroll (STP). 

Though you are not yet required to report through STP, you will be from 1 July 2019. If you use online or cloud-based payroll software, you may be able to start reporting now. 

You will need to report payments such as salary and wages, Pay As You Go (PAYG) withholding and super information when you pay your employees.

Low-cost Single Touch Payroll solutions for micro businesses

A range of simple, low-cost Single Touch Payroll solutions are expected to be available in the market from early 2019. These solutions will best suit micro employers (with one to four employees) who need to report through STP, but do not currently have payroll software. There is a list of software companies on the ATO website that intend to develop solutions for micro businesses.

Tip! We are able to assist you in meeting your STP obligations. This may save you the expense of obtaining your own STP software. Contact us before 1 July 2019 for help deciding what to do about meeting your upcoming STP obligations.

Does your business own a rental property? 

If you own residential rental property, you are only able to claim deductions for travel expenses relating to inspecting, maintaining, or collecting rent from the property if you are carrying on a rental property business or the property is owned by an excluded entity (eg a company). 

The law changed on 1 July 2017 to restrict when travel expenses associated with rental properties could be claimed. If you haven't yet lodged your 2018 income tax return for your business, check with us whether you are eligible to claim these travel expenses.