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Small businesses are viewed by the Government as the engine room of our economy and therefore, they have received considerable tax cuts to allow them to grow.

Increase in small business entity turnover tests

From 1 July 2016, the small business entity turnover test will increase from $2M to $10M.

What does this mean? These businesses will have access to:

  • Lower corporate tax rates (see below)

  • Simplified depreciation rules, i.e. immediate write off for assets costing less than $20,000

  • Simplified trading stock rules

  • Simplified method of paying PAYG instalments

  • Simplified GST reporting

This does NOT affect the eligibility of small business capital gains tax concessions. This will remain available under its existing rules being the $2M turnover test or $6M net asset test.

Change in corporate tax rates

This is best summarised in the below table:

IncomeYear Annual Turnover Tax Rate

2016 $2M 28.5%

2017 $10M 27.5%

2018 $25M 27.5%

2019 $50M 27.5%

2020 $100M 27.5%

2021 $250M 27.5%

2022 $500M 27.5%

2023 $1B 27.5%

2024 ALL 27.5%

2025 ALL 27%

2026 ALL 26%

2027 ALL 25%

Unincorporated (e.g. individuals) small business tax discounts

Unincorporated businesses that have an annual turnover of less than $5M (currently $2M) will receive a tax discount. This will phase in over 10 years from 5% initially to 16%.

This is up to a maximum tax discount of $1,000 per individual in an income year.

New Tax Avoidance Taskforce

The Government is funding the ATO in establishing a new Tax Avoidance Taskforce which will focus on multinationals, large private groups and high net wealth individuals.


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