End of Year Tax Tips for Businesses

Check eligibility for small business tax regime

Small businesses (sole traders, partnerships, companies and/ or trusts with a turnover of less than $10 million) may be eligible for a range of tax benefits including immediate write-off of assets costing less than $20,000; 27.5% company tax rate; simplified depreciation; and accounting on a cash basis.

Broadly, the small business must carry on a business and its annual turnover (excluding GST) cannot exceed $10 million. Turnover will also be aggregated to include the annual turnover of certain affiliates and entities connected with the taxpayer.

While meeting the $10 million turnover test automatically entitles small businesses to choose certain concessions such as simplified rules for both tax depreciation and trading stock, it is important to note that additional eligibility tests apply to claim the small-business CGT concessions and the small business threshold remains $2 million.

Make trust resolutions by 30 June

As always, trustees of discretionary trusts are required to make and document resolutions on how trust income is to be distributed to beneficiaries for the financial year by 30 June.

If a valid resolution is not executed by 30 June, any default beneficiaries under the deed will become presently entitled to trust income and subject to tax (even where they do not receive any cash distribution), or the trustee could be assessed at the highest marginal tax rate on any taxable income derived but not distributed by the trust.