This support note applies to:
- AO Tax (AU)
- AE Tax Series 6 & 8 (AU)
- AE Tax (AU)
The Small Business Tax Offset (SBTO) was introduced through the Tax Laws Amendment (Small Business Measures No. 3) Bill 2015, receiving Royal assent on 26th August 2015.
This amendment provides a non-refundable tax offset of up to a maximum of $1000 to individuals who:
- are Small Business Entities (SBE)
- have a share of a small business income from:
- partnership share of SBE income or
- trust share of SBE income.
In the tax return, there are worksheets to assist with values that may need to appear. The location of items is different based on the return you are completing:
Partnership & Trust Returns
SBTO non-refundable tax offset is only available for eligible:
- individual taxpayers who are an individual partner in the partnership SBE or
- taxpayers who are an individual beneficiary of a trust SBE.
An individual taxpayer can't claim a non-refundable tax offset where they received a share of small net business income from an SBE, but via an interposed entity. For example, net small business income derived by another SBE that is a trust, and distributed to an interposed trust, isn't net small business income of the receiving interposed trust. An Individual taxpayer will receive validation error code V2832 where the interposed entity has distributed to the Individual taxpayer claiming SBTO. In this case, the taxpayer is not entitled to SBTO.
SBE Eligibility Test
Complete the following process in each return that may have eligible small business income (i.e. to be either declared or distributed) that may qualify for this tax offset.
The ATO advises that the SBE eligibility status must be reviewed each year. In MYOB Tax, complete the SBE Eligibility Test worksheet each year. To ensure that the test is conducted each year in accordance with the ATO instructions, the information won't be rolled over to the following tax year.
- To use the SBE Eligibility Test worksheet in MYOB, go to Preparation > Schedule.
- To be eligible for this offset, the taxpayer must be able to answer Yes to both questions.
Review the Small Business Income Worksheet
This worksheet was introduced to help with reconciling income that is eligible for this tax offset.
- Go to Preparation > Schedule and open the Small Business Income worksheet.
To ensure that all the eligible small business income is factored in for this offset, review the worksheet and, if necessary, complete the worksheet.
The worksheet looks different depending on the return you're in (individual, partnership or trust) but you can access it the same way.
Calculating the SBTO
This tax offset is available to individuals and therefore only appears in the individual tax return estimate.
- Finalise any related partnership and trust income tax returns, including any available distribution to any partners and beneficiaries.
- Enter the required information into the individual return.
- Press F4 Estimate. MYOB Tax calculates the SBTO.
MYOB INTERNAL STAFF ONLY
The tax offset can reduce the tax payable that relates to the individual's small business income by 5% up to a maximum of $1000.
If you need to, see What's new for small business?