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ATO spots errors in small biz income tax offset claims

The Tax Office has identified some common errors when tax practitioners are reporting net small business income to claim a tax offset.

Tax&Compliance Reporter 11 January 2019
— 1 minute read

In an online update, the ATO noted that it has identified some common errors by tax practitioners when reporting client income to claim the small business income tax offset.


The small business tax offset is for small business entities with a turnover of less than $5 million, with a maximum offset of $1,000 per year per person from all sources of small business income.

According to the ATO, practitioners should include net income derived by the small business partnership or trust at either item 13D or 13E, not at 15A.

The amounts to include at item 13D or 13E are the share of net small business income from a small business partnership (in which they are a partner); and share of net small business income from a small business trust (in which they are a beneficiary).

Practitioners should also take care not to include the following types of income at item 15A, as they are not eligible for the offset. These include, personal services income – this is reported at item 14A (however income from carrying on a personal services business is included at item 15A); Salary, wages or directors fees; and dividend income of directors.

Other tips include completing all relevant fields, including sole trader business income at item 15A and including net income and not gross income.

ATO spots errors in small biz income tax offset claims
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