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Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES

PART 3-45 - RULES FOR PARTICULAR INDUSTRIES AND OCCUPATIONS

Division 328 - Small business entities

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Subdivision 328-C - What is a small business entity

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Operative provisions

SECTION 328-110 Meaning of small business entity

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General rule: based on aggregated turnover worked out as at the beginning of the current income year

328-110(1)
You are a small business entity for an income year (the current year ) if:

(a) you carry on a *business in the current year; and

(b)

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one or both of the following applies:

(i) you carried on a business in the income year (the previous year ) before the current year and your *aggregated turnover for the previous year was less than $10 million;

(ii) your aggregated turnover for the current year is likely to be less than $10 million.

Note 1:

The $10 million thresholds in this subsection and in subsections (3) and (4) have been increased to $50 million for certain concessions (for example, see subsection 328-285(2) ).

Note 2:

If you are or would (if the $10 million thresholds in this subsection and subsection (3) were increased to $50 million) be a small business entity for an income year, you may apply for permission:

(a) under section 61C of the Excise Act 1901 to deliver goods for home consumption (without entering them for that purpose) in respect of a calendar month or a quarter; or

(b) under section 69 of the Customs Act 1901 to deliver like customable goods or excise-equivalent goods into home consumption (without entering them for that purpose) in respect of a calendar month or, for excise-equivalent goods, a quarter.

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History

S 328-110(1) amended by No 40 of 2023, s 3 and Sch 4 item 14, by substituting notes 1 and 2 for notes 1, 2, and 3, effective 1 July 2023. Notes 1, 2, and 3 formerly read:

Note 1:

If you are a small business entity for an income year, you may apply to the Commissioner under section 61C of the Excise Act 1901 for permission to deliver goods for home consumption (without entering them for that purpose) in respect of a calendar month.

Note 2:

If you are a small business entity for an income year, you may apply under section 69 of the Customs Act 1901 for permission to deliver like customable goods or excise-equivalent goods into home consumption (without entering them for that purpose) in respect of a calendar month.

Note 3:

The $10 million thresholds in this subsection and in subsections (3) and (4) have been increased to $50 million for certain concessions (for example, see subsection 328-285(2)).

S 328-110(1) amended by No 92 of 2020, s 3 and Sch 3 item 29, by inserting note 3, effective 1 January 2021.

S 328-110(1) amended by No 41 of 2017, s 3 and Sch 3 item 15, by substituting " $10 million " for " $2 million " (wherever occurring) in para (b), effective 1 July 2016. For application provision, see note under s 328-357 .

S 328-110(1) amended by No 37 of 2012, s 3 and Sch 1 item 11, by inserting note 2, effective 15 April 2012.

S 328-110(1) amended by No 36 of 2012, s 3 and Sch 1 item 26, by substituting note 1 for note, effective 15 April 2012. The note formerly read:

Note:

Section 328-110 of the Income Tax (Transitional Provisions) Act 1997 affects the operation of this subsection in relation to the 2007-08 and 2008-09 income years.

328-110(2)
You work out your *aggregated turnover for the current year for the purposes of subparagraph (1)(b)(ii) :

(a) as at the first day of the current year; or

(b) if you start to carry on a *business during the current year - as at the day you start to carry on the business.

Note:

Subsection 328-120(5) provides for how to work out your annual turnover (which is relevant to working out your aggregated turnover) if you do not carry on a business for the whole of an income year.

Exception: aggregated turnover for 2 previous income years was $10 million or more

328-110(3)
However, you are not a small business entity for an income year (the current year ) because of subparagraph (1)(b)(ii) if:

(a) you carried on a *business in each of the 2 income years before the current year; and

(b)

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your *aggregated turnover for each of those income years was $10 million or more.

Note:

Section 328-110 of the Income Tax (Transitional Provisions) Act 1997 affects the operation of this subsection in relation to the 2007-08 and 2008-09 income years.

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Additional rule: based on aggregated turnover worked out as at the end of the current income year

328-110(4)
You are also a small business entity for an income year (the current year ) if:

(a) you carry on a *business in the current year; and

(b)

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your *aggregated turnover for the current year, worked out as at the end of that year, is less than $10 million.

Note:

If you are a small business entity only because of subsection (4) , you cannot choose any of the following concessions:

(a) paying PAYG instalments based on GDP-adjusted notional tax: see section 45-130 in Schedule 1 to the Taxation Administration Act 1953 ;

(b) accounting for GST on a cash basis: see section 29-40 of the GST Act;

(c) making an annual apportionment of input tax credits for acquisitions and importations that are partly creditable: see section 131-5 of the GST Act;

(d) paying GST by quarterly instalments: see section 162-5 of the GST Act;

(e) applying for permission under the Excise Act 1901 to deliver goods for home consumption (without entering them for that purpose) in respect of a calendar month or a quarter: see section 61C of that Act;

(f) applying for permission under the Customs Act 1901 to deliver like customable goods or excise-equivalent goods for home consumption (without entering them for that purpose) in respect of a calendar month or, for excise-equivalent goods, a quarter: see section 69 of that Act.

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Winding up a business previously carried on

328-110(5)
This Subdivision applies to you as if you carried on a *business in an income year if:

(a) in that year you were winding up a business you previously carried on; and

(b) you were a *small business entity for the income year in which you stopped carrying on that business.

Note 1:

Subsection 328-120(5) provides for how to work out your annual turnover (which is relevant to working out your aggregated turnover) if you do not carry on a business for the whole of an income year.

Note 2:

A special rule applies if you were an STS taxpayer under this Division (as in force immediately before the commencement of this section) in the income year in which you stopped carrying on the business: see section 328-111 of the Income Tax (Transitional Provisions) Act 1997 .

Partners in a partnership

328-110(6)

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A person who is a partner in a partnership in an income year is not, in his or her capacity as a partner, a small business entity for the income year.

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