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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 will increase to 8 per cent, 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.

    The increases will 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 will be 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 will be extended to individual taxpayers with business income from an unincorporated business that has an aggregated annual turnover of less than $5 million.

    Administrative treatment

    The ATO accepted all 2017 income year tax returns as lodged during the period up until the date of royal assent.

    Taxpayers who did not claim the offset will need to review their positions for the 2016–17 income year and seek amendments.

    Taxpayers who claimed the offset and received the 5% discount rate will be entitled to an amendment. We will identify these cases and arrange amendments. If a reduction in liability results, interest on overpayment will be paid.

    Legislation and supporting material

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

    See also:

      Last modified: 26 Jun 2017QC 48875