Small Business Entity — what counts and what concessions follow

An entity is an SBE for an income year if its aggregated turnover is under $10 million for either the previous year or the current year (with reasonable estimate). 'Aggregated' means it includes related entities — connected entities and affiliates — so a Pty Ltd plus a related family trust are tested together. Most family-run trades, retail and service businesses sit comfortably under the threshold.

· Simplified depreciation pool — small assets pooled at 30% diminishing value, large assets at 15% · Instant asset write-off — full deduction in the year of purchase up to a threshold (varies by year) · Prepaid expenses — claim immediately if the period of the prepayment is 12 months or less · Trading-stock simplification — small movements (under $5,000) don't need formal stock-take adjustments · Pay GST on cash basis — even if accruals would normally apply

On sale of a business or business-use asset, four concessions can apply on top of the 50% individual discount: 15-year exemption (full exemption if held 15+ years and you're 55+ retiring), 50% active-asset reduction (further 50% off the gain), retirement exemption (up to $500,000 lifetime limit per individual) and rollover (defer the gain by buying another active asset within two years).

If turnover is over $10m but the net value of the business and connected entities (not including personal-use assets, super, family home) is under $6m, the CGT concessions still apply via the net-asset-value test. Particularly relevant for asset-heavy but lower-revenue businesses.

· Failing the aggregated test because of a connected family trust that pushes the group over $10m · Treating active and passive assets the same on sale — investment-rental properties are not active assets · Missing the 15-year exemption because the holding period is structured wrong (asset moves between entities mid-life) · Claiming the instant asset write-off on assets above the threshold or used for predominantly private purposes

Before any business sale, well in advance — CGT concessions need 12 months of structuring to use fully. Also worth a yearly review at year-end-planning time to make sure depreciation, prepayments and stock are all using the SBE rules.