In the 2011-12 Budget, the then Government announced a measure to abolish the entrepreneurs’ tax offset. The entrepreneurs’ tax offset was a non-refundable tax offset that was introduced in the 2005-06 Budget as additional assistance for very small, micro and home-based businesses in their early stages of development. It applied to assessments for income years commencing on or after 1 July 2005 and was abolished by the Tax Laws Amendment (Stronger, Fairer, Simpler and Other Measures) Act 2011 from 1 July 2012. The then Prime Minister granted an exceptional circumstances exemption for the Government’s tax reform agenda in response to the Australia’s Future Tax System (Henry) Review which included the abolition of the entrepreneurs’ tax offset. Consequently, a Post implementation Review was required to commence within one to two years of the abolition of the offset. The Post-implementation Review found that the benefits of abolishing the entrepreneurs’ tax offset included simplifying tax regulation by removing a poorly targeted law and a minor distortion between wage earners and those that derive business income. The Post-implementation Review concluded that abolishing the entrepreneurs’ tax offset had a small, but direct impact, most notably the loss of $500 in average income for 380,000 business entities in the 2011-12 income year who claimed the entrepreneurs’ tax offset. The Post-implementation Review prepared by the Department of the Treasury was assessed as adequate by the Office of Best Practice Regulation.
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