How to claim the Small Business Tax Offset and other Incentives

The government has a number of incentives for small businesses, such as the small business tax offset. Calibre helps you structure them within a cohesive strategy for growth.


James Maston - small business tax offset advice

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James Maston - Tax Director
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The recent expansion of the definition of a small business for tax purposes creates significant tax and commercial opportunities. The small business tax offset for companies is just one of a package of accessible incentives. Your should plan to take advantage of these opportunities now, to grow in both the medium and long term.

You may be a small business now, even if you weren’t in the recent past. The definition has been expanded. Businesses turning over $10 million can access a variety of income tax concessions, such as the small business tax offset, as well as simplified means of accounting. Previously the definition had been restricted to businesses turning over less than $2 million.

  • For incorporated businesses (e.g. a company) the income tax rate has been reduced to 27.5% effective from the 2016-17 financial year.
  • For a sole trader a small business tax offset is available of $1,000 per year.
  • depreciation rules have been simplified and accelerated so that your business can save tax on newly acquired plant material and equipment.
  • An immediate tax deduction is available for plant and equipment for your business worth less than $20,000. This is open to you until 30 June 2018, so planning fixed asset and growth requirements is essential immediately.

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How do I access the Small Business Tax Offset and incentives?

The small business tax offset for companies may seem like a minor boost. But in this more open landscape where more companies can access rebates, this small business tax offset is all the more useful when considered alongside other government grants such as the R&D tax incentive, EMDG and the NSW Jobs Action Plan. The combination of these incentives can potentially facilitate your business’ growth in a powerful way.

“Calibre helped define us as a small business for tax purposes. They advised and implemented the various tax breaks that were available to us. Their knowledge, particularly in relation to asset purchases, really helped us to renew our plant and equipment without significant tax cash costs.” Local Factory

Am I eligible for these small business tax offsets?

Do you meet the turnover requirement? – Whilst the definition says its less than $10 million turnover, it is an aggregate turnover test. You need to demonstrate that the turnover of your business and any other businesses you control is less than $10 million in the relevant year.

Which Year’s Turnover? – Is it this years, last years or my expected turnover that needs to be measured against the $10 million threshold? There is a lot of flexibility with this definition that allows planning opportunities particularly if the nature of your business means your turnover is not consistent.

Are you in Business? – It may be a simple question but in a lot of instances it can be complicated. It is vital to consider where you stand in detail before applying for the small business tax offset or any other incentives.

Calibre has a reputation for not only helping access small business tax incentives, but also for applying them to your overall financial planning so that your business can grow.

Edward Song - Small Business Tax Offset advice

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Edward Song - Director
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Making the most of your claim.

Medium to long term planning regarding your operations and capital requirements is essential to making the most of the small business tax offset and other benefits. How will the small business tax offset impact your tax payments in a fluctuating tax climate? For example, the corporate tax rate is set to progressively reduce until 2027, when it will reach 25% for all entities turning over less than $50 million:

Corporate Tax Rate Year Size of Business
27.5% 2017 Turnover less than $10m
27.5% 2018 Turnover less than $25m
27.5% 2019-2024 Turnover less than $50m
27% 2025 Turnover less than $50m
26% 2026 Turnover less than $50m
25% 2027 Turnover less than $50m

How do you plan ahead with these benefits? It is important to consider how tax reductions like the small business tax offset and R&D tax incentives will factor into your financial planning. Changes to FBT, ATO Benchmarking, and other tax measures should be taken into account. How you reinvest your tax savings is almost more important than getting a small business tax offset in the first place. Calibre Business Advisory can help integrate incentives into a smart plan.

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