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The Australian Federal Government offers a number of tax concessions for small businesses. They can vary depending on the structure of your business. The definition of the word "small" must also be considered.

Individuals who are running a business as a sole trader, or as a partner in a partnership are entitled to a tax concession, known as a tax offset, if their gross income from the business is below AUD75,000. This offset is known as the entrepreneurs offset and is really aimed at startup businesses, but is not restricted to them. The flaw in this concession is that it is based on gross income, so a business that is service based may have this level of income that provides a fair income, while a retail business with this level of sales would not be viable.

Businesses with income well in excess of AUD75,000 are still considered small business under Australian Taxation Law. In fact, a small business can have a gross income of up to 2 million Australian dollars. A recent initiative by the Australian government, in an attempt to stimulate the Australian economy in the current recession, has offered small business an increased tax deduction for money spent on the purchase of new equipment costing over one thousand Australian dollars. The equipment must be purchased prior to the end on the 2009 calendar year and possession of the acquisition before the end of the 2010 calendar year. Under this new concession, the taxpayer is entitled to a tax deduction, thereby reducing their income, by 50% of the original cost. The taxpayer is still entitled to a capital allowance, otherwise known as depreciation, of the full cost of the asset over its estimated life.

The capital allowance that can be claimed by a business can also be accelerated if it is a small business. Imagine a business buys an asset with an estimated life of 10 years. The initial capital allowance calculation would the cost of that asset to be claimed at 10% per year. While most business would be allowed to claim 20% per year using the diminishing value method, small business are allowed to place such assets into a "pool". This will allow assets costing below one thousand Australian dollars to be claimed in full in the year purchased and those costing above that amount to claim 30% on a diminishing value method. This allows the small business to claim such tax deductions earlier than would otherwise be available. Should the total value of the "pooled" assets fall below one thousand Australian dollars, the balance can be claimed in full in that year.

Another concession available to small business in Australia relates to the sale of the business. While Australia does have a capital gains tax on assets that are sold, various concession are available. Such concessions can allow the profit from the sale of the business to be tax free, if the business has been owned for over 15 years or with other concessions and the contribution of part of the proceeds in a Superannuation retirement fund.

This is only a brief snapshot of tax concession available to small businesses in Australia. The knowledge of these and other tax concessions is a complex area. The small business owner must consult with a registered tax profession to obtain the full benefit of any tax concessions to which they may be entitled.

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