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Re: Small Business Tax Offset

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Last year I used an accountant for the first time and received the small business tax offset of $1000 for the first time.  This year I am using my tax.  I believe I am still entitled to the offset however all my income as what I believe is classified as a sole trader is foreign income as I do work exclusively for an overseas company so I have declared it as Other Foreign Income in my tax.  However my tax wants me to declare income in Business/sole trader, partnership and trust income in order to claim the offset.  I have looked on my tax at the tax return done last year by my accountant and he declared my income under labels 20E and 20M which I believe is Other Foreign Income as I have done this year.  So I am confused why I got the offset last year and not this year and if I am doing something wrong in my tax.  I do not have an ABN or company or do BAS if that is relevant.  

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ATO Certified

TaxTime Support

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Hi @abc123,

 

Thanks for your question!

 

In addition to the information provided by @Li0, you can find a guide on reporting foreign income in myTax here and information about the Small Business tax offset, including eligbility here.

 

Business offsets and deductions can generally only ever be applied against business income, so if you have not reported any business income there will be nothing for these offsets or deductions to apply to.

 

You may wish to speak to the accountant who lodged your tax return last year for guidance on how it should be reported this year.

 

Hope this helps,

 

Rachael B.

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Li0
Enthusiast

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Hi,

 

Your case is a bit complicated. The first thing I got stuck into was that you describe your income as foreign income. If you derive that income by providing services to an oveseas entity while residing to Australia I don't think this is foreign Income. If you want to know more about that have a look here:

https://www.ato.gov.au/individuals/international-tax-for-individuals/in-detail/foreign-income-of-aus...

 

Regarding the small business offset in order to be entitled this you need to have a business schedule. Also, make sure you tick yes to the question are you a small business entity (i think it's on label 15) as thats were the offset is calculated.

 

My advice to you is visit an accountant (a good one) the cost of the accountant is less than what it will cost you if you fill in the tax return wrong.

Best answer

ATO Certified

TaxTime Support

Replies 0

Hi @abc123,

 

Thanks for your question!

 

In addition to the information provided by @Li0, you can find a guide on reporting foreign income in myTax here and information about the Small Business tax offset, including eligbility here.

 

Business offsets and deductions can generally only ever be applied against business income, so if you have not reported any business income there will be nothing for these offsets or deductions to apply to.

 

You may wish to speak to the accountant who lodged your tax return last year for guidance on how it should be reported this year.

 

Hope this helps,

 

Rachael B.

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