Did you know that eligible businesses can access a wide range of concessions to reduce the amount of tax they need to pay? Basically, it applies to partnerships, sole traders, companies and trusts. Eligibility requirements vary for different concessions. Before you apply for any concession, it’s suggested that you should check your eligibility for each concession. If you don’t know how to check eligibility requirements and apply for a concession, you can seek help from our Reliable Melbourne accountants.
Small Businesses Concessions
Eligible small businesses can apply for small business concessions depending on their total turnover. This applies to partnerships, companies, trusts, and sole traders. Apart from total turnover, most small businesses can have additional eligibility conditions. You need to check your eligibility requirements each year before applying for a concession. If you have a total turnover less than:
- $2 million, then you are eligible for small business CGT concessions
- $5 million, then you are eligible to apply for the small business income tax offset
- $10 million, then you can apply for a small business restructuring rollover.
Business Income and Deductions
It’s essential to pay the right amount of tax. Tax contributes to various public services like roads, schools, and hospitals, which is why it’s crucial that everyone pays the right amount of tax. Most income you receive from running your business is assessable for income tax purposes. You may be able to apply for tax deductions for most business expenses. You may also qualify for certain offsets, concessions, and rebates. You must:
- Keep complete and accurate financial records of your assessable income and expenses. Your records need to be in English or need to be converted to English. You can hire a Melbourne bookkeeper to keep your financial records updated and organised.
- Use the right methods for calculating and reconciling the amounts you are looking to claim.
- Report all deductions and income to the ATO at the right time.
- Pay any amounts owed on time.
Primary Producer Concessions
Special tax concessions may impact the amount you declare in your assessable income each year if you are a primary producer. These concessions can also affect when you must pay your income tax, as you may be able to make 2 PAYG instalments each year, instead of 4.
Primary producers can also access primary production averaging that may enable you to pay a lower tax rate in years where you make above-average money. To qualify for special concessions for primary producers, you need to meet the definition of carrying on a business of primary production, which considers the scale or size of your business and its profitability.
Primary producers working alone or with partners can also take advantage of exceptions to the non-commercial losses rules. Typically, these rules prevent you from offsetting losses from a non-commercial business activity against other assessable income. However, these restrictions do not apply if your income from other sources (excluding net capital gains) is below $40,000.
It’s advisable to reach out to our Accounting Firm Melbourne to understand all potential tax concessions you are eligible for. As a result, you can better focus on your business.
Special Sportspersons, Professionals, and Entertainers’ Concessions
Some special professionals, entertainers, and sportspersons are eligible for income averaging. This may allow you to pay a lower tax rate in years when you make above-average money. You may be eligible for income averaging if you are:
- an artist
- an author
- a composer
- an inventor
- a performing artist
- a production associate
- a sportsperson.
You can also make 2 PAYG instalments each year instead of 4. The ATO will send you a letter if you qualify for this option.
Conclusion
Whether you are running a small business or a large organisation, it’s crucial to consider business concessions, deductions, or offsets. Make sure to apply for concessions that you are eligible for. You can get in touch with Reliable Melbourne Accountants to get a clear understanding of potential concessions or tax deductions.