Plumbers and plumbing enterprises have access to specific tax concessions, Mark Chapman from H&R Block reports.

If you run your own plumbing business, the chances are tax is not a popular topic. It’s a complicated subject that can easily take up time you don’t have in complying with obligations you don’t understand and it usually involves writing a large cheque to the government.

There is an upside to tax, though. A number of significant tax breaks exist which are specifically designed to make doing business for people just a little bit easier and a little bit less costly.

Called small business tax concessions, here are the tax breaks all plumbing businesses need to know about.

Get an immediate deduction for capital purchases

Until 30 June 2019, any small business can immediately write off any asset purchase costing less than $20,000. That means your business can immediately deduct the cost of items like tools, machinery, office furniture and even motor vehicles provided the cost is less than $20,000 per item.

The instant asset write off provides a great way for small businesses to tax effectively improve their efficiency and productivity by pgrading the productive assets they need to make their business tick.

To use the tax break, your business must have an annual turnover of less than $10 million.

Help for capital gains tax (CGT)

Sooner or later, there will come a time when you move on from your business. You might choose to sell your business and buy a new one,
retire completely or pass it on to the kids or to your employees.

Either way, there is a suite of capital gains tax (CGT) reliefs designed to minimise the taxes you pay when you dispose of your whole business or part of it.

There are four CGT concessions that may be available to eliminate or reduce capital gains made by a small business or its owners where it disposes of “active” assets, like a trade or business premises.

The reliefs are available to businesses with an aggregate turnover of less than $2 million.
The concessions are:

• The 15 year exemption

Available where a taxpayer who is at least 55 years of age and is retiring disposes of a CGT asset that has been owned for a minimum of 15 years. The entire gain is tax-free if you qualify for this exemption.

• The retirement exemption

A taxpayer may apply capital proceeds from the disposal of a CGT asset to the retirement exemption, up to a lifetime maximum of $500,000 – as it is not necessary to actually retire, the concession can be utilised more than once.

• The 50% active asset reduction

The capital gain arising from the disposal of a CGT asset (like a building) may be discounted by 50% (in addition to the normal 50% discount available to individuals and trusts)

• The CGT rollover

A capital gain arising from the disposal of a CGT asset may be deferred provided a replacement asset is acquired within a two year period – the gain is deferred until disposal of the replacement asset. This one is great if you dispose of one business and buy another. H&R Block’s advice is for general use, always seek tailored information to suit your circumstances.