Small Business Tax Offset (SBTO)

This support note applies to:

AO Tax (AU)
AE Tax Series 6 & 8 (AU)
AE Tax (AU)

Article ID: 37931

The Small Business Tax Offset (SBTO) was introduced through the Tax Laws Amendment (Small Business Measures No. 3) Bill 2015, receiving Royal assent on 26^th 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.

This offset won't be paid on the share of SBE income derived from a company.

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:

Individual Return

Item 13 label D
Item 13 label E
Item 15 label A.

Partnership & Trust Returns

Item 5 label V.
Item 5 label V Net small business income will only populate in the Small Business Entity. This field won't populate where an interposed entity has received a share of net small business income.
Additionally, the distribution label included in the worksheets Distribution received from Trusts and Distribution received from Partnerships won't populate net small business income at item 5 label V where the receiving entity is the interposed entity.

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 complete the SBE Eligibility Test

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.

To claim the 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.

To calculate the SBTO

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?