Exploring the Benefits of 90 Test for Small Business Concessions
Small business owners have to be always mindful of their finances. When it comes to managing taxes, they often struggle to keep up with the changes and requirements. With laws and regulations constantly evolving, it can often be hard to feel confident that you are filing your taxes correctly. However, a newly introduced measure, the 90 test, is an important tool in small business concessions that can help you manage your taxes more effectively.
What is the 90 Test?
The 90 test is a measure that the Australian Taxation Office (ATO) introduced that helps small business owners determine their eligibility for small business concessions. The test is composed of four separate, yet related tests that businesses can do to determine if they are eligible for these concessions.
Why is the 90 Test Important?
The main benefit of the 90 test is that it provides small business owners with an easy and efficient way of managing their taxes. By taking these tests, small business owners can see what concessions they can claim and benefit from. This can include claiming deductions, discounts, and benefits on taxes.
How to Qualify for Small Business Concessions?
To qualify for small business concessions, certain rules and guidelines must be met, including:
- Having an aggregated annual turnover of less than $10 million
- Actively being engaged in a business (not just using it for investment or personal purposes)
- Being a small business entity, which is determined by your business’ size, structure, control, and connected entities
What are the Benefits?
There are various advantages to taking the 90 test for small business concessions. One of the main benefits is the ability to reduce your tax liability. Small business owners, with the help of the 90 test, can claim certain concessions, which will ultimately lead to a smaller tax bill.
Examples of the 90 Test in Practice
By taking the 90 test annually, small business owners can easily determine if they are eligible for concessions. A common example of a small business concession is the simplified depreciation rules. This concession allows small business owners to claim the costs of assets as deductions in the year they were purchased, compared to following a long-term depreciation schedule.
Conclusion
For small business owners in Australia, the 90 test is an essential tool to look into if they are looking to streamline their tax processes. By taking the test, small business owners can determine their eligibility for small business concessions, and potentially reduce their tax liability. As always, it’s essential to stay up-to-date with the latest in tax regulations and laws, and the 90 test is a wonderful way to do just that.
