06 October 2020

Federal Budget 2020-21: Small Business

The amendment of the small business entity turnover threshold from $10 million to $50 million will see 10 small business tax concessions extended to medium-sized businesses.  This is in addition to a number of fringe benefits tax changes and COVID-19 measures specifically tailored towards small businesses.

Increase the small business entity turnover threshold to medium-sized businesses

The Government will expand access to a range of small business tax concessions by increasing the small business entity turnover threshold for these concessions from $10 million to $50 million.

Businesses with an aggregated annual turnover of $10 million or more but less than $50 million will for the first time have access to up to ten further small business tax concessions in three phases:

  • From 1 July 2020: eligible businesses will be able to immediately deduct certain start-up expenses and certain prepaid expenditure.
  • From 1 April 2021: eligible businesses will be exempt from the 47 per cent fringe benefits tax on car parking and multiple work-related portable electronic devices (such as phones or laptops) provided to employees.
  • From 1 July 2021: eligible businesses will be able to access the simplified trading stock rules, remit pay as you go (PAYG) instalments based on GDP adjusted notional tax, and settle excise duty and excise-equivalent customs duty monthly on eligible goods under the small business entity concession. Eligible businesses will also have a two-year amendment period apply to income tax assessments for income years starting from 1 July 2021, excluding entities that have significant international tax dealings or particularly complex affairs.

The eligibility turnover thresholds for other small business tax concessions (including the small business CGT concession) will remain at their current levels.

Boosting cash flow for small and medium businesses

As previously announced, the Government is providing tax-free cash flow boosts of between $20,000 and $100,000 to eligible small and medium businesses and not-for-profit organisations that employ individuals. Eligible entities automatically receive payments upon lodgement of relevant activity statements for the March to September 2020 reporting periods. This will support the connection between employers and employees and help entities continue to operate through the economic downturn associated with COVID-19.

Making Victoria's COVID-19 business support grants non-assessable, non-exempt income

The Government will make the Victorian Government’s business support grants for small and medium business as announced on 13 September 2020 non-assessable, non-exempt (NANE) income for income tax purposes.

The Commonwealth will extend this arrangement to all States and Territories on an application basis. Eligibility would be restricted to future grants program announcements for small and medium businesses facing similar circumstances to Victorian businesses.

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