myTax 2024 Small business income tax offset

Things to know

Complete this section if you are an eligible small business entity with a turnover less than $5 million. You may be entitled to the small business income tax offset.

The maximum small business income tax offset is $1,000 per year per person from all your sources of small business income.

To be eligible, you must either:

• be carrying on a small business as a sole trader
• have a share of net small business income from a partnership or trust.
  Your statement of distribution or advice from the partnership or trustee should include details of your 'Share of net small business income' from each partnership or trust that is a small business entity.

Report your business income in two places

Amounts you enter at the Small business income tax offset question are only used to work out your tax offset. They are not included in your taxable income.

To make sure your taxable income and tax offset are correct, you must report your business income in 2 places:

• at Business income or losses – these amounts are included in your taxable income. You must also report the following business income/loss at the relevant sections
  • foreign business income
  • net farm management deposits or repayments
  • interest and dividend income from carrying on your business
• at Small business income tax offset in the Offsets section – these amounts are only used to work out your tax offset.

Eligible income

Only include income that is eligible for the offset. The offset is worked out on your net income (not gross income), which is your:

• sole trader net small business income (business income after deductions)
• share of partnership net small business income less your deductions relating to that share
• share of trust net small business income less your deductions relating to that share.

Small business income tax offset includes more information:

• about eligibility for this offset
• on considerations particular to sole traders, partnerships, trusts and beneficiaries.

Income and deductions not eligible for this offset

Some income and deductions should not be included in small business income in the Offsets section as they are not used when working out your tax offset. These include (but are not limited to):

• income
  • personal services income (unless from a personal services business)
  • salary and wages, allowances and director's fees
  • some government payments
  • interest and dividends (unless related to a business activity)
• deductions
  • gifts, donations or contributions
  • personal superannuation contributions.

For full list of items excluded see Income and deductions you cannot include.

Completing this section

We pre-fill your tax return with small business income tax offset information shown in Managed fund and trust distributions.

To personalise your return to show small business income tax offset, at Personalise return select:

• You are claiming tax offsets or adjustments
• Small business income tax offset

To show small business income tax offset, at Prepare return select 'Add/Edit' at the Offsets banner.

At the Small business income tax offset heading:

1. Work out the amounts to enter at this section using the Small business income tax offset calculatorThis link opens in a new window.
2. Enter information into the corresponding fields.
3. Select Save and continue when you have completed the Offsets section.

We will work out your tax offset, using the amounts you entered at:

• Net small business income (from sole trading activities).
• Partnership share of net small business income less deductions attributable to that share.
• Trust share of net small business income less deductions attributable to that share.