From 1 July 2007 the former Simplified Tax System (STS) was replaced by the Small Business Entity (SBE) provisions. The new provisions work very similar to the former STS rules, however some key changes have been made to the eligibility criteria and the ability to pick and choose the concessions that apply to you.

The Small Business Entity (SBE) provisions provide an alternative method of determining taxable income for eligible small businesses with straightforward financial affairs.

Broadly, you are able to gain access to these concessions if:

• you carry on a business in that year; and
• your aggregated turnover is less than $2 million dollars.

The main concessions available to Small Business Entities are:

• Simplified depreciation rules
• Depreciating assets that cost less than $1000 each will be written off immediately and claimed as a deduction in the year in which you started to use the asset, or installed it ready for use, for a taxable purpose.
• Other depreciating assets which have an effective life of less than 25 years will be pooled and depreciated at the diminishing value rate of 30%.
• A Simplified treatment of trading stock:
• Taxpayers will only be required to account for changes in their trading stock on hand or do stocktakes at the end of the year where the difference between the value of opening stock and your reasonable estimate of closing stock exceeds $5000.
• Eligibility for a 25% Entrepreneurs Tax Offset (where your turnover is less than $75,000)
• Two year amendment period (instead of four years), and
• Access to the Small Business Capital Gains Tax concessions