To be eligible for the Small Business Income Tax Offset, you must be carrying on a small business as a sole trader or have a share of net small business income from a partnership or trust. The tax offset is 16% for the 2023/24 year. This includes businesses operated as a sole trader, partnership or trust structure.

The business must also currently have an annual turnover less than $5 million for the year.

If eligible, the tax payable on the business income is reduced by 16% up to a maximum discount of $1,000 per individual.

For example, if you ran a business as a sole trader and had a tax liability of $5,000 for 2023/24 on that business income, this would be reduced by $800 (16% x $5,000). Only $4,200 tax would be payable. Liability to Medicare or other levies is not reduced.