Small Business Income Tax Offset

Kerry Schultz

In the 2015-16 budget the government announced the introduction of an income tax offset for individual taxpayers with business income from an unincorporated (non-company) business that has an aggregated annual turnover of less than $2 million. This has been passed through parliament and is now law.

This offset is designed to reduce the tax rate of small businesses which do not operate through incorporated structures and to assist with cash flow to promote growth.

The discount is five percent of the income tax payable on the taxable business income received by the individual tax payer. The discount is capped at $1,000 per individual for each income year starting 2015-16 income year. This is an offset only on tax payable on profits and is not refundable if the business makes a loss.


Husband and Wife partnership running a business makes a taxable profit of $150,000. Profit is split 50/50 so husband and wife each end up with $75,000 taxable income, on this they would both receive a small business income tax offset of $796.10 each.