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  • Increase the unincorporated small business tax discount

    In the 2016–17 Budget, the Government announced an increase to the tax discount for unincorporated small businesses incrementally over 10 years from 5 per cent to 16 per cent.

    From 1 July 2016, the tax discount increased to 8 per cent, was then to remain constant at 8 per cent for eight years, then increase to 10 per cent in 2024–25, 13 per cent in 2025–26 and reach a new permanent discount of 16 per cent in 2026–27.

    On 16 October 2018, the Government introduced Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Bill 2018 which accelerates the future increases to the small business tax discount as follows:

    • 8 per cent for the 2019-20 income year (as previously legislated)
    • 13 per cent for the 2020-21 income year
    • 16 per cent for the 2021-22 income year and for subsequent income years.

    The increases coincide with staggered cuts in the corporate tax rate for certain entities to 25 per cent. The current cap of $1,000 per individual for each income year is retained.

    The tax discount applies to the income tax payable on the business income received from an unincorporated small business entity. The discount is provided by way of a small business income tax offset which you claim in your individual tax return.

    From 1 July 2016, the discount is extended to individual taxpayers with business income from an unincorporated business that has an aggregated annual turnover of less than $5 million.

    Legislation and supporting material

    The Treasury Laws Amendment (Enterprise Tax Plan) Act 2017External Link received royal assent on 19 May 2017.

    The Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Act 2018External Link received Royal Assent on 25 October 2018.

    See also:

      Last modified: 31 Oct 2018QC 48875