Sole traders
We use your net small business income to calculate your small business income tax offset.
Calculating net small business income
Your net small business income is the sum of your assessable income from carrying on your business, minus any deductions.
If your net small business income is a loss, it's treated as zero and you're not entitled to the offset.
If you had more than one sole trader business during an income year, you combine all your assessable business income from all your sole trader businesses and then minus the deductions from that total income.
If you carried on more than one business and any of them made a loss, apply the non-commercial losses rules first. Your net small business income is only reduced by losses deductible in the current year. To work out your net small business income, start with the net business income or loss and then increase this amount by any sole trader deferred non-commercial losses not deductible in the current year.
Eligible income and deductions
Include the following amounts in your net small business income:
- farm management deposits claimed as a deduction
- repayments of farm management deposits included as income
- net foreign business income related to your sole trading business
- other income or deductions, such as interest or dividends derived in the course of conducting your business.
Income and deductions you cannot include
Don't include the following income amounts in working out net small business income:
- net capital gains you made from carrying on your business
- personal services income (unless you were a personal services business)
- salary and wages
- allowances and director's fees
- government allowances and pensions
- interest and dividends unless it's related to a business activity
- interest earned on a farm management deposit.
Don't include the following deductions in working out net small business income:
- tax-related expenses such as accounting fees
- gifts, donations or contributions
- personal superannuation contributions
- current year business losses, which are not deductible this year under the non-commercial loss rules
- tax losses from prior years (unless they are deferred non-commercial losses).
We'll work out your offset using the net small business income you show on your tax return.
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