Guide 1 of 5 · Tax
The tax definition: a small business entity, under $10 million
For tax, a business is a small business entity for an income year if it carries on a business in that year and its aggregated turnover is less than $10 million, judged on last year’s figure, this year’s likely figure, or this year’s actual figure at year end. The test is section 328-110 of the Income Tax Assessment Act 1997, and the ATO ties many small business concessions to aggregated turnover, each with conditions of its own.
General information, not tax advice. The official place to check is the ATO’s concessions page; a registered tax agent can say how the rules apply to one business.
Aggregated turnover · the line: less than $10 million
The test, in the Act’s words
Subsection 328-110(1) sets the general rule:
“You are a small business entity for an income year (the current year) if:
- you carry on a business in the current year; and
- one or both of the following applies:
- you carried on a business in the income year (the previous year) before the current year and your aggregated turnover for the previous year was less than $10 million;
- your aggregated turnover for the current year is likely to be less than $10 million.”
Income Tax Assessment Act 1997, s 328-110(1), from the ATO legal database
Subsection (4) adds one more way in: a business is also a small business entity if its “aggregated turnover for the current year, worked out as at the end of that year, is less than $10 million”.
The $10 million figure has stood since 1 July 2016. The Act’s history notes record that it replaced $2 million, by an amending Act of 2017 with effect from that date.
Three ways to be under the line
- Last year’s figure. The business ran in the previous income year and its aggregated turnover for that year was less than $10 million.
- This year’s likely figure. Aggregated turnover for the current year is likely to be under $10 million. It is worked out as at the first day of the year, or, for a business that starts during the year, as at the day it starts.
- This year’s actual figure. Worked out at the end of the year, aggregated turnover is under $10 million.
A limit on the second way
Subsection (3) says a business cannot qualify as a small business entity through its likely turnover if it carried on a business in each of the two income years before the current year and its aggregated turnover for each of them was $10 million or more.
A limit on the third way
A note to subsection (4) says that a business that is a small business entity only because of that subsection cannot choose any of these concessions:
- PAYG instalments based on GDP-adjusted notional tax;
- GST accounted for on a cash basis;
- an annual apportionment of input tax credits on partly creditable acquisitions and importations;
- GST paid by quarterly instalments;
- an Excise Act 1901 permission for goods to be delivered for home consumption without being entered first, for a calendar month or a quarter;
- a Customs Act 1901 permission for like customable goods or excise-equivalent goods to be delivered for home consumption without being entered first, for a calendar month or, for excise-equivalent goods, a quarter.
What aggregated turnover takes in
The ATO describes aggregated turnover as “based on the annual turnover of your business and that of any business entities that are your affiliates or connected with you”. So the line takes in a business’s affiliates and connected entities, not one entity on its own.
For a business that does not run for a whole income year, the Act points to subsection 328-120(5) for how its annual turnover is worked out.
Who the test applies to
- Any structure. The ATO says its small business concessions apply to sole traders, partnerships, companies and trusts.
- Partners. A person who is a partner in a partnership is not, in their capacity as a partner, a small business entity for the year.
- A business being wound up. The rules apply as if the business were still carried on in a year in which it is being wound up, if it was a small business entity in the year it stopped.
What the ATO ties to aggregated turnover
On its concessions page, last updated 20 May 2025, the ATO lists turnover lines below the $10 million one.
| Aggregated turnover less than | What the ATO says it gives access to |
|---|---|
| $2 million | The small business CGT concessions |
| $5 million | The small business income tax offset |
| $10 million | The small business restructure roll-over; and the choice to use the simplified depreciation rules, a line that applies from 1 July 2016 onwards ($2 million for earlier income years) |
The ATO adds that, apart from aggregated turnover, “most small business concessions have extra eligibility conditions”, and that eligibility should be checked each year before a concession is applied. The Act itself notes that its $10 million thresholds “have been increased to $50 million for certain concessions”.
The write-off limit, with its dates
The simplified depreciation rules have two parts, the ATO says: an instant asset write-off for assets costing under the relevant limit, and a general small business pool. The ATO’s page gives the limit as $20,000 for assets first used or installed ready for use on or after 1 July 2023, for businesses with aggregated turnover under $10 million that apply those rules. The Treasury Laws Amendment (Tax Reform No. 2) Act 2026 has since changed the amount written into paragraph 328-180(1)(b) of the Act from $1,000 to $20,000, for assets first used, or first installed ready for use, for a taxable purpose from 1 July 2026. Its note explains that “the $1,000 amount is still relevant to the earlier (temporary) increases to those thresholds”.
Where this line sits among the others
Like the payment times line, this one measures money alone: no head count, no assets. A business can be well under $10 million and still be past the Fair Work line of 15 employees. Under the Ombudsman’s Act, by contrast, a business with 100 or more employees is still small if its revenue for the previous financial year was $5 million or less.