Tax concession rules for small businesses have changed. The changes are effective from 1 July 2016, and will apply from your 2017 tax return.

Expanded access to small business concessions

More businesses are now eligible for most small business tax concessions.

From 1 July 2016, a range of small business tax concessions became available to all businesses with turnover less than $10 million (the turnover threshold). Previously the turnover threshold was $2 million.

When we say ‘turnover’, we mean aggregated turnover.

The $10 million turnover threshold applies to most concessions, except for:

  • the small business income tax offset, which has a $5 million turnover threshold from 1 July 2016
  • capital gains tax (CGT) concessions, which continue to have a $2 million turnover threshold.

The turnover threshold for fringe benefits tax (FBT) concessions increased to $10 million from 1 April 2017.

Increased small business income tax offset

You can claim the small business income tax offset if you are a small business sole trader, or have a share of net small business income from a partnership or trust.

From the 2016–17 income year, the small business income tax offset:

  • increased to 8%, with a limit of $1,000 each year
  • applies to small businesses with turnover less than $5 million.

The tax offset increases to 10% in 2024–25, to 13% in 2025–26 and to 16% from the 2026–27 income year.

You will need to report your business income in two places – at:

  • Business/sole trader, partnership and trust income (including loss details) to count towards your taxable income
  • Small business income tax offset (under ‘Offsets’) so we can work out your offset.

There’s a range of income that is not eligible for the offset, for example, you cannot include personal services income or salary, wages or directors fees.