Small Business Concessions for Australians: What You Need to Know

Running a small business in Australia can be both rewarding and challenging, but one thing that does tend to cause disproportionate stress is the matter of tax.

From navigating compliance to managing cash flow, small business owners often wear many hats, and for many of them, taxation is the most stressful and least desirable part of the job. Fortunately, the Australian government offers a range of small business tax concessions and support programs designed to ease the burden and help small enterprises thrive.

Whether you're a sole trader, a company, or part of a family business, understanding and using these concessions can improve your profitability, boost cash flow, and reduce administrative overhead.

Here’s a practical guide to the main small business concessions available in Australia, along with tips on how to make the most of them.

What Qualifies as a Small Business?

Before diving into the concessions, it’s important to understand whether your business qualifies.

In most cases, you must have an aggregated turnover of less than $10 million to access small business tax concessions. Some capital gains tax (CGT) concessions have higher thresholds (up to $2 million in turnover or $6 million in net assets).

Make sure you check the specific eligibility criteria for each concession, as they can vary depending on the type of business structure and income.

1. Lower Company Tax Rate

If you operate through a company structure, you may be eligible for a reduced company tax rate.

• For the 2024 – 25 financial year, base rate entities (companies with aggregated turnover under $50 million and no more than 80% passive income) pay 25% tax, compared to the full rate of 30%.
• This rate applies to both trading income and eligible franking credits passed on to shareholders.

Tip: To qualify, ensure your business is actively trading and not primarily earning passive income (e.g. interest or rent).

2. Instant Asset Write-Off

The instant asset write-off allows small businesses to immediately deduct the cost of eligible assets rather than depreciating them over several years.

• As of 1 July 2023, businesses with a turnover under $10 million can instantly write off eligible assets costing less than $20,000, subject to legislation being passed.
• The threshold applies per asset, meaning multiple purchases under the limit can be written off in full.

Tip: Keep detailed records and ensure the asset is installed and ready for use within the financial year.

3. Simplified Depreciation Rules

If your business uses assets that exceed the instant write-off threshold, simplified depreciation rules may still apply:

• Assets are pooled and depreciated at 15% in the first year, and 30% each year after.
• When the balance of the pool falls below the threshold, it can be written off entirely.

This simplifies accounting and allows faster deduction of asset costs compared to traditional methods.

4. Simplified Trading Stock Rules

Small businesses can choose not to do a formal stocktake if the estimated difference in value between opening and closing stock is less than $5,000.

This concession helps reduce year-end administrative tasks and is especially useful for retail or inventory-heavy businesses.

Tip: Keep informal stock records to support your estimate, in case of an audit.

5. Immediate Deduction for Prepaid Expenses

If your business prepays expenses (like rent, insurance, or subscriptions), you may be able to claim a full deduction immediately, rather than spreading it over the period covered.

This applies if:

• The expense is under 12 months, and
• The business has a turnover of under $50 million.

Tip: Prepaying some expenses before 30 June can be a useful year-end tax planning strategy.

6. Small Business CGT Concessions

If you're selling a business asset, such as a company, equipment, or goodwill, you may be eligible for Capital Gains Tax (CGT) concessions.

There are four main CGT concessions available:

1. 15-Year Exemption – If you’ve owned the business for 15+ years and are retiring or permanently incapacitated, you may pay no CGT at all.
2. 50% Active Asset Reduction – Reduces capital gain on eligible assets by 50%.
3. Retirement Exemption – Allows up to $500,000 of capital gains to be exempt from tax (subject to age and superannuation limits).
4. Rollover – Defer CGT if you reinvest the proceeds in another active asset.

Tip: These concessions are complex; always seek professional advice before selling a business or business asset.

7. Fringe Benefits Tax (FBT) Concessions

Small businesses can benefit from certain FBT exemptions or reductions, including:

• Car parking exemptions for businesses with a turnover under $10 million.
• Exemptions for portable electronic devices (like phones or laptops) are provided to employees primarily for work.

Tip: Ensure the benefit is provided for business purposes to qualify for the exemption.

8. PAYG Instalment Concessions

Small businesses may be able to pay Pay-As-You-Go (PAYG) tax instalments quarterly based on actual income, rather than a fixed instalment amount.

• You can choose to calculate instalments based on GDP-adjusted figures or vary them if your income changes.

Tip: Review your PAYG instalments regularly to avoid overpaying tax or incurring penalties.

9. GST & BAS Concessions

Simplified GST reporting is available for businesses under the $10 million turnover threshold:

• Use cash accounting for GST (recognise income and expenses when money changes hands).
• Lodge BAS quarterly instead of monthly.
• Simplified BAS requires fewer labels and calculations.

Tip: Use accounting software that integrates with the ATO to streamline your GST and BAS obligations.

10. Superannuation Contributions for Small Business Owners

While not a concession per se, it’s worth noting that super contributions made on behalf of yourself (as a sole trader or partner) are tax-deductible, up to the concessional cap ($27,500 for the 2024–25 year).

Tip: Making regular super contributions helps build retirement savings and can reduce your tax bill.

Australia offers a wide range of small business concessions designed to reward entrepreneurship, reduce complexity, and support business growth. Whether it’s tax deductions, capital gains relief, or simplified reporting, these concessions can make a meaningful difference to your bottom line.

The key is knowing what’s available and using it strategically. Speak to a qualified tax professional or accountant to ensure you're making the most of what you're entitled to and staying compliant along the way.

With a little planning and advice from your local accountants in Murwillumbah (or any other location that the experts at Oracle Accounting can support across Australia), small business owners can turn tax rules into real advantages.

Reach out to us today!

Important information – Oracle Advisory Group makes no representation or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. The information in this document is general information only and is not based on the objectives, financial situation or needs of any particular investor. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek their own professional advice. Past performance is not a reliable indicator of future performance. The information provided in the document is current as the time of publication.