From 1 July, 2015 (ie: the 2015/16 financial year just ended), an individual will be eligible to a 5% discount, as a non-refundable tax offset, for an income year when the individual is a small business entity sole trader or an individual’s income includes a share of the net income of a non-incorporated small business entity such as a partnership or trust.
This measure was introduced to match the reduction in the company tax rate, and of course there are some rules that go with it.
The sole trader or small business entity must have carried on a business during the year and have a turnover (sales) of less than $2 million (this amount will need to be annualised for any business that commences or ceases during the year – I can help you with this!)
There is a special calculation for calculating this discount (or offset, as is the more official terminology…) but I won’t bore you with that here…you just need to know that it is limited to $1,000 and cannot be applied against the tax payable on wages or investment income (including dividends received from a small business entity company).
If you think this might apply to you, make sure you get The Tax Chic to complete your tax return, simply Contact me on how to do so.