Claiming the small business income tax offset

Your business may be entitled to the small business income tax offset. The tax offset allows certain businesses to reduce their taxable income by up to $1,000.

This offset is available from the 2015-16 income year onwards. Small businesses with an aggregated turnover less than $5 million can access the concession from the 2016-17 income year.

When you lodge your tax return, the ATO will calculate your offset based on your total net small business income.

Business income derived by another partnership or trust, in which the small business owner is not a partner or beneficiary, is not eligible for the offset.

Small business owners can claim the offset if they carry on a small business as a sole trader or they receive a share of net small business income from a small business:

  • partnership, in which they are a partner
  • trust, in which they are a beneficiary.

The offset is 8 per cent for the 2016-17 income year onwards, 5 per cent for the 2015-16 income year. The offset will increase to 10 per cent in 2024-25, 13 per cent in 2025-26 and 16 per cent in 2026-27.

Cristy Houghton