This article focuses on the 2023–24 financial year (1 July 2023 to 30 June 2024), with notes where 2024–25 differs. It covers the R&D Tax Incentive, Fuel Tax Credits, the small business offset, temporary 2024 deductions and the records you need to back up a claim.
Key Takeaways
- Offsets reduce tax payable; deductions reduce taxable income. Identify which you have before calculating.
- R&D and Fuel Tax Credits need registrations, records and specific claim pathways.
- The energy and skills boosts are extra deductions that ended on 30 June 2024.
- Check rates, thresholds and deadlines with the ATO, AusIndustry and your state revenue office.
Understanding Australian Tax Credits, Offsets, and Eligibility
Offset, deduction, rebate, grant or concession?
- Deduction: reduces taxable income.
- Offset or rebate: reduces tax payable. The ATO uses both terms.
- Grant: program funding, such as the Export Market Development Grants for international marketing.
- Concession: a tax benefit with its own eligibility conditions.
Offsets also differ by refund type:
- Non-refundable: cannot take tax below zero; carry-forward rules vary by measure
- Refundable: can produce a cash refund, including for eligible R&D entities
What drives eligibility
Eligibility can turn on several factors:
- Business structure (company, sole trader, partnership or trust)
- Aggregated turnover, which includes connected entities and affiliates, not just the applicant
- Qualifying expenditure and fuel use
- GST registration
- State or territory location
Rules change often. Confirm each measure against ATO guidance for the income year you are claiming.
Essential Australian Business Tax Credits and Offsets for 2024
R&D Tax Incentive
This is the main federal incentive for eligible research and development. It is for eligible companies, not sole traders or partnerships.
Core activities are experimental work that generates new knowledge, where the outcome cannot be known in advance. They follow a systematic process of hypothesis, experiment, observation, evaluation and conclusions, as set out in business.gov.au guidance.
Supporting activities must be directly related to the core work. Market research, sales promotion, routine testing and internal-administration software are excluded core activities.
Offset rates for 2023–24 and 2024–25:
| Entity | Offset |
|---|---|
| Turnover under $20m, not controlled by exempt entities | Refundable: company tax rate + 18.5 percentage points |
| Other eligible entities | Non-refundable: company rate + 8.5 points on expenditure up to 2% R&D intensity, + 16.5 points above |
| Notional expenditure above $150m | Excess earns the company tax rate only |
Intensity is notional R&D expenditure divided by total expenditure. The premiums apply incrementally, so don't quote one headline rate for everyone.
Qualifying costs include salaries, contracted R&D, feedstock inputs and asset decline in value. Building and interest costs are excluded.
Process: register with AusIndustry within 10 months of the income year ending (30 April for 30 June balancers). Register before claiming, then lodge the R&D Tax Incentive Schedule with the company tax return.
Records: keep contemporaneous evidence for five years after claiming:
- Project descriptions and hypotheses
- Testing results
- Time records and payroll data
- Invoices linking spend to eligible activities
Apportion any non-R&D costs.
Fuel Tax Credits
Eligible fuels used in business machinery, plant, equipment and eligible vehicles qualify. Private use is excluded. So are vehicles of 4.5 tonnes GVM or less travelling on public roads.
Rates depend on the acquisition date. For diesel and petrol in 2024 (cents per litre):
| Acquired | Heavy public-road use | Other eligible uses |
|---|---|---|
| 1 Jan–4 Feb 2024 | 20.0 | 48.8 |
| 5 Feb–30 Jun 2024 | 20.8 | 49.6 |
| 1 Jul–4 Aug 2024 | 19.1 | 49.6 |
| 5 Aug–31 Dec 2024 | 20.1 | 50.6 |
Other fuels have separate rates. See the ATO fuel rates page.
You must be registered for GST and fuel tax credits. Claim on your BAS at label 7D (credits and increasing adjustments) or 7C (decreasing adjustments). The general time limit is four years.
Keep invoices, fuel quantities, business-use evidence and calculations for five years. Unsupported claims can mean repayment, penalties and interest.
Small business income tax offset
This offset is for eligible individuals, not companies. It covers sole traders, partners and trust beneficiaries with business aggregated turnover under $5m.
It equals 16% of the tax on your net small business income, capped at $1,000 per individual each year. The ATO calculates it from your return. A company structure doesn't receive it, so check your entity before relying on it.
State and territory relief
Payroll tax rebates and apprenticeship incentives vary by jurisdiction. Examples:
- NSW: a payroll tax rebate for approved apprentices and new-entrant trainees; existing-worker trainees are excluded.
- Queensland: a historical 50% apprentice and trainee rebate.
- Tasmania (2024–25): eligible hires from 1 July 2024 to 30 June 2025.
None of these is a universal federal credit. Confirm eligibility and the claim process with your state revenue office.
Who should investigate first?
- Businesses developing new or improved products, software or processes: R&D.
- Qualifying fuel users: Fuel Tax Credits.
- Eligible sole traders, partners and trust beneficiaries: the small business offset.
Review the actual activity before lodging. Don't chase a measure just because it promises the biggest number.
Other 2024 Deductions and Incentives Businesses May Confuse With Tax Credits
Instant asset write-off
This reduces taxable income and isn't a credit. For 2023–24, businesses with aggregated turnover under $10m can deduct eligible depreciating assets costing less than $20,000 each, first used or installed ready for use between 1 July 2023 and 30 June 2024.
The $20,000 threshold was extended to 2024–25 by the Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025.
Key rules:
- Deduct only the business portion and exclude claimable GST
- Keep the whole asset cost under the threshold, not just the business share
- Assets excluded from simplified depreciation don't qualify
- Passenger car limits still apply
Small Business Energy Incentive
For businesses with turnover under $50m, this gave a 20% bonus deduction on up to $100,000 of eligible spend (maximum bonus $20,000). Assets had to be first used and installed between 1 July 2023 and 30 June 2024.
The ATO example: refrigeration costing $1,100 including $100 claimable GST has a $1,000 eligible cost and a $200 bonus deduction.
Eligible spend covers electrification, efficient appliances and storage. Excluded items include:
- Fossil-fuel assets
- Generation assets
- Capital works
- Motor vehicles
There is no new 2024–25 window.
Skills and Training Boost
This gave a 20% additional deduction for eligible external training of employees, for businesses under $50m turnover. Spending had to fall between 29 March 2022 and 30 June 2024.
Conditions include:
- Providers must be registered and independent of you
- Contractors, non-employee sole traders and partners are excluded
- New training spend after 30 June 2024 does not qualify
Grants and state concessions
Grants such as EMDG, payroll tax rebates and state concessions often involve applications, competitive criteria or location rules. They're not ordinary income tax claims. Most grants are assessable income, and GST treatment depends on whether a taxable supply exists.
How to Assess, Document, and Claim 2024 Tax Benefits
1. Review your activities and entity
List these items, then map each expense to one potential benefit before calculating anything:
- Entity type, turnover and industry
- R&D work, training and payroll
- Fuel use and asset purchases
- Location and registrations
2. Build an evidence file through the year
Collect:
- Invoices and payroll reports
- Timesheets and contracts
- Fuel logs and asset in-service dates
- Project notes and technical documents
- Registration confirmations and prior claims
A general ledger entry alone rarely proves eligibility, especially for R&D, mixed-use assets and fuel. Most business records must be kept for five years.
3. Follow the right pathway
R&D needs AusIndustry registration, then the ATO schedule with the company return. Fuel credits go through the BAS. State incentives use their own forms.
For 2023–24, self-lodging individuals, partnerships and trusts on 30 June balance dates generally lodge by 31 October. Small and medium businesses generally have two years to amend 2023–24 returns, and four years for 2024–25.
4. Check overlaps and double-claiming
- Apportion private use and exclude claimable GST.
- The ATO permits the energy bonus alongside the R&D notional deduction, but not a duplicate ordinary deduction for the same R&D spend.
- R&D registration deadlines and fuel credit limits are separate from income tax amendment periods.
5. Set an annual review calendar
Plan these before they happen, since some incentives need advance registration:
- R&D work and training
- Asset purchases and hiring
- Fuel use
Before lodging, compare bookkeeping data, payroll, BAS figures and supporting evidence.
Plan Your 2024 Tax Claims With Professional Support
VJM Global provides bookkeeping, financial statement preparation, corporate tax return preparation and annual filings for Australian businesses. A team of 100+ accounting professionals has served 250+ Australian businesses across 15+ industries, with a 95% client retention rate.
Support covers:
- Year-end reporting and documentation reviews
- Flagging offsets or deductions that may apply
- Security-compliant systems with strict confidentiality for client data
Before lodging a current or amended return, have your entity structure, 2024 activities, records and potential claims reviewed. VJM Global does not replace official ATO or state guidance, and every claim should be tailored to the business. Reach out at [email protected].
Frequently Asked Questions
How much can a small business earn before paying taxes?
There is no single tax-free amount. Taxable income after deductions, plus entity type and rates, decides the outcome. Resident sole traders had a $18,200 tax-free threshold in 2023–24; companies pay 25% or 30%.
What expenses can I write off for my small business?
Ordinary expenses incurred in earning business income are deductible, with private use excluded and mixed use apportioned. Capital assets follow depreciation or write-off rules. Keep documentation, and remember deductions differ from offsets.
What's the best tax write-off for a small business?
It depends on what you actually spend and whether you qualify. Eligible assets, training, energy-efficient upgrades and everyday operating costs can all help. No single measure is best for everyone.
What is the 20% tax deduction for small business owners?
That wording usually refers to the US Section 199A deduction, which isn't an Australian concept. Australia's 20% boosts for energy and training were separate and ended on 30 June 2024.
What is the best tax structure for a small business?
Sole trader, partnership, company and trust structures differ in tax, compliance, liability and distributions. The right one depends on your circumstances and plans. Get advice before changing.
What are the tax advantages of owning a small business?
Legitimate deductions, possible offsets, depreciation concessions and R&D incentives may apply. Tax benefits are no substitute for commercial or structural advice.
