# ATO: Board of Taxation review of small business concessions



## Jack Malarkey (Jan 11, 2016)

From the Australian Taxation Office's Small Business Newsroom:


*Tell us how we can improve tax concessions*









*27 June 2018*

There are lots of tax concessions available for small business, and the Board of Taxation wants to hear what you think about them.

They want to know how the tax concessions may continue to support you and the challenges you face.

They would like to hear your feedback on:
What tax issues are of particular concern for small businesses?
What do you regard as the most useful or effective small business tax concessions? Why?
What opportunities do you see for improving existing small business concessions?
Which current small business concessions are not working and/or should be removed? Why?
What ideas do you have for new concessions that could help small businesses?
You can answer one question or all of them - all feedback is valuable! The Board's Consultation Guide has more information for you.

The Board is seeking submissions by 20 July. If you'd like to be involved in public consultation sessions, be sure to let them know in your email, and also where you're located.

*Next steps:*
Provide your written feedback to [email protected]
Read the Board of Taxation's Review of Small Business Tax ConcessionsExternal Link
*Find out about:*

Concessions at a glance

(https://www.ato.gov.au/Newsroom/sma...e-can-improve-tax-concessions/?sbnews20180711)


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## Jack Malarkey (Jan 11, 2016)

I have made the following submission to the Board of Taxation’s review:

1. Thank you for the opportunity to make this submission.

2. In part, it is informed by and reflects my experience in my current occupation carrying on a small business as a rideshare driver (Uber, GoCatch and Ola).

3. I would be happy to be involved in further consultation.

FLOW-THROUGH ENTITY TREATMENT 

4. I recommend the introduction of flow-through entity treatment as an option for closely-held small businesses. This could be modelled on the S Corporation treatment in the United States.

5. Flow-through treatment would help ensure appropriate treatment throughout a small business’s life cycle and would help avoid the need for complex structures of the kind referred to in the consultation paper.

$20,000 INSTANT ASSET WRITEOFF 

6. The $20,000 instant asset writeoff is important for rideshare drivers and other small businesses including for the purchase of cars and smartphones.

7. This concession should become an ongoing feature of the tax system rather than be subject to ad hoc annual extensions. These ad hoc extensions lead to unacceptable uncertainty in investment decisions and planning.

UNINCORPORATED SMALL BUSINESS DISCOUNT 

8. The current offset is capped at $1,000 per individual for each income year. This cap should be removed given that there is no equivalent cap for small business companies benefiting from lower company tax rates.

IMMEDIATE DEDUCTION FOR PROFESSIONAL EXPENSES 

9. The immediate deduction for professional exoenses and certain taxes does not currently extend to mandatory health reports required to establish a rideshare business (and many other businesses).

10. The immediate deduction should be extended to cover all expenses that come within the scope of the general deduction over five years for ‘blackhole expenses’. 

11. At a minimum, the deduction should be extended to cover health reports of this kind.

ATO ADVICE

12. It would be an opportunity missed if the Board’s report didn’t include recommendations directed to the Australian Taxation Office. The Board’s review several years ago into the capital gains tax small business concessions, for example, included such recommendations.

13. Policy, legislation and administration (PLA) need to be in alignment.

14. In the early days, the Tax Office did a creditable job in providing advice to rideshare drivers. This included general guidelines and webinars (including online summaries of the webinars).

15. More recently, that assistance has dried up. The webinar summaries are no longer available.

16. The Tax Office could usefully reinstate the earlier arrangements. This would include an online Q & A document to complement the current guidelines. There should be an email address available to rideshare drivers and their tax agents to raise questions for answers via the online Q & A document.

FURTHER CONSULTATION 

17. I would be pleased to be involved in any further consultation.

18. I may be contacted by phone on ...or by email on ...

Jack Malarkey


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## prk (Jul 9, 2015)

I dont mind that the $20k instant write off isn't available all the time, it's nice to be able to claim some depreciation , and reduce your tax bill in future years.



Jack Malarkey said:


> 11. At a minimum, the deduction should be extended to cover health reports of this kind.


Oops, Ive always claimed mine


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## Jack Malarkey (Jan 11, 2016)

prk said:


> I dont mind that the $20k instant write off isn't available all the time, it's nice to be able to claim some depreciation , and reduce your tax bill in future years.
> 
> Oops, Ive always claimed mine


In my view, the $20,000 instant asset writeoff should be available as an ongoing part of the tax system to provide an OPTION for an immediate deduction (as it currently is as an option). There will be many drivers for whom it is better to claim depreciation over several years but there will be others for whom the full deduction in the one year is the better deal.

The problem at present is that drivers can't be sure that the instant asset writeoff will be available the following year. For example, drivers don't really know now whether the instant writeoff will be available from 1 July 2019 assuming that the Government's foreshadowed extension of the end date from 30 June 2018 to 30 June 2019 is enacted (which is almost certain but is yet to happen).

Re the health report costs, there's no problem making this claim if the expense is incurred once the driver has commenced their business. The problem arises for the cost of the initial report to qualify to start the business in the first place.

This may, strictly speaking, be a capital expense that's not deductible under the general deduction provision as a business expense.

A particular provision comes to the rescue for setting up a small business in relation to certain legal expenses and government taxes and charges but not for health reports. The cost of the health report to qualify to begin the business is likely, strictly speaking, to be deductible only over five years.

Administrative practice seems to be to accept the immediate deduction for the cost of these health reports but administrative practice can end in favour of the strict legal position at any time. Law is better than lore.

That is why I have sought that particular change in my submission to the Board of Taxation's review.


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## prk (Jul 9, 2015)

Thanks for clarifying this Jack


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## Jack Malarkey (Jan 11, 2016)

The Board of Taxation report of its review into the small business tax concessions became publicly available on Thursday 12 December 2019.

Here's a link to the report: https://cdn.tspace.gov.au/uploads/sites/70/2019/12/RSBTC-report.pdf.


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