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  • Small business taxpayers

    Small businesses make a strong contribution to the Australian economy and play a critical role in our tax system. Small businesses:

    • employ around five million Australians
    • contribute around 30% of all income tax collected.

    Measuring the income tax performance for small business helps us work out how we can better support small business owners – and where to focus our efforts to ensure they are paying the right tax.

    There are around four million small businesses in Australia.

    From a tax perspective, our small business population is made up of the businesses themselves, plus all of the associated individuals that are required to pay tax on the income generated by the businesses. We refer to the businesses and the associated individuals as 'entities'.

    The ATO’s small business population is made up of approximately six million entities. This population broadly includes:

    • partnerships, companies and trusts with a turnover up to $10 million
    • individuals associated with the above businesses (partners of partnerships, beneficiaries of trusts, directors and shareholders of companies)
    • sole traders receiving business income up to $10 million.

    When calculating the income tax gap, our primary focus is on entities that have an income tax obligation. In our small business population, this includes:

    • companies with a turnover up to $10 million
    • individuals associated with small businesses (including partnerships, trusts and companies)
    • sole traders receiving business income up to $10 million.

    Partnerships and trusts generally don’t pay income tax – the income they generate is usually distributed to individuals or companies. We still review the business affairs of partnerships and trusts. We check that the right amounts have been reported by those responsible for paying tax on the income.

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    Last modified: 27 Aug 2019QC 59956