Simplified Tax System becomes more flexible

The Simplified Tax System (STS) was introduced to reduce the tax burden on small business and to simplify record keeping. Until recently, it stipulated the use of the STS accounting method to calculate assessable income and allowable deductions for an income year. The requirement to use the STS accounting method has now been removed.

Now, STS taxpayers are able to select the accounting method most appropriate to their circumstances. In other words, it is now possible to use either the STS accounting method, the accruals (earnings) method or the cash (receipts) method.

Each of the methods has different implications for a small business and there are advantages to be gained depending on your circumstances. Saward Dawson would be pleased to advise on which method should be adopted for your situation.

Published : 8 June 2006