A ‘small business entity’ is considered to have an aggregated turnover of less than $2 million. A turnover is composed of all gross income or proceeds earned in the usual course of business for the fiscal year. Some factors like any goods and services tax (GST) amounts charged on the sales are not included in the turnover.

Small business entities have been eligible but must meet certain conditions for a range of tax concessions. Eligible businesses can opt to use the concessions that match their business, although they may have to meet additional conditions. They have to confirm whether they can be considered for the concessions each tax year.

A business is not considered a small business entity if its aggregated turnover is more than $2 million. On the other hand, such business entity may still be considered for the CGT small business concessions (if it has net assets of $6 million or less), and the FBT car parking exemption (if total ordinary income and statutory income is less than $10 million).

A small business can be managed in different ways although it has corresponding tax implications.

A small business tax of a sole trader includes the assessable business income less the business deductions you can claim and any other assessable income, such as salary and wages (shown on a payment summary), dividends and rental income, less any allowable deductions against this income.

A small business tax of a partnership includes the partnership’s income less expenses and deductions. The partnership may also have to provide other forms and schedules. As part of the partnership, you must also divulge the following on your individual tax return your share of any partnership net income or loss and any other assessable income, such as salary and wages (shown on a payment summary), dividends and rental income.

A small business tax of a trust is the trust’s income less expenses and deductions. The trust may additionally submit other forms and schedules. As a trust beneficiary, you must also report the following on your personal income tax return any income you receive from the trust and any other assessable income, such as salary and wages (shown on a payment summary), dividends and rental income.

Take note, as a sole trader, partnership or trust, the report would only include your taxable income and net income or loss in your small business tax. You do not have to work out the amount of tax you are liable to. You may be eligible to claim a tax offset depending on whether you maintain a dependent, whether you live in a remote area and how much taxable income you earned.