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Entrepreneurs’ Tax Offset Replaced

closeThis post was published 3 years 5 months 18 days ago.

Information or rates given may no longer be valid or current.

The Government will abolish the Entrepreneurs’ Tax Offset (ETO), with effect from the 2012-13 income year. The ETO currently provides a 25% reduction in tax payable for small businesses with revenue under $50,000 (phasing out  at $70,000).

Replacing the ETO will be an immediate write-off of $5,000  for any car purchased from the 2012-13 year, with the balance being depreciated at 30%. Here’s how that would work:

Let’s use the Treasury example figure and assume you purchase a car for $33,960. At the moment, if you tossed that car into a pool, you would be able to to depreciate the first year at 15% and subsequent years at 30%. So the first year, you’d have a depreciation expense of $5,094 (33,960 x 15%).

Under the new proposal, you would immediately have $5,000 written off and then transfer the remaining $28,960 into a general small business depreciation pool to be expensed at 15% (another $4,344). This would give you a total first year write-down of $9,344. 

This measure is designed to build on the Government’s existing tax reforms for small businesses to be introduced in 2012-13 that allow:

  • an immediate write-off of all assets valued at under $5,000 (up from $1,000 presently);
  • a write-off of all other assets (except buildings) in a single depreciation pool at a rate of 30 per cent; and
  • a reduction in company tax rate to 29 per cent for incorporated small businesses.

These tax reforms will be available to all small businesses, including sole traders and businesses operating through trusts, partnerships and companies.


The Federal Treasurer, Mr Wayne Swan, presented the Gilliard Government’s budget on 10th May 2011.  None of the items contained within the budget will become law until they have been passed by the House of Representatives and the Senate, and signed by the Executive Council.

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Besides accounting, Christie is passionate about all things small business, lifelong learning and chocolate. She spends her leisure time blogging, making sites (like this one) and playing Sims (shhh!.... that's a secret). You can contact Christie directly at christie@lewistaxation.com.au.

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