Contact us now for a free consultation

Contact Us

Changes to the company tax rate

The political landscape has been interesting in recent times as our major parties try to deal with the current economic outlook to take our country forward in a more certain environment for small to medium businesses. One such action taken by the federal government is passing the legislation to bring forward previously enacted tax cuts for small and medium companies. This is likely to impact most of our clients and the summary of the changes is briefed below with a link to full bill of the Treasury included.

An entity which has predominately passive income will not be eligible for the lower corporate tax rate and will continue to pay tax at 30%.

For the 2018/19 and 2019/20 income years, the rate will be 27.5%.

For the 2020/21and 2021/22 income years, the current rate of 27.5% will be reduced to 26% in 20/21 and 25% in 21/22.

A base rate entity is allowed to pay tax at the lower corporate rate if no more than 80% of the corporate tax entity’s assessable income for that income year is base rate entity passive income and the aggregated turnover of the corporate tax entity for the income year is less than the aggregated turnover threshold for that income year.

This means that an entity which has predominately passive income will not be eligible for the lower corporate tax rate and will continue to pay tax at 30%.

The aggregated turnover threshold for the 2018/19 and following tax years is currently $50m per year.

If you have any questions in this regard, please do not hesitate to contact your team member at RCB Advisors for further discussion.

Source: Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Bill 2018

https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fbillhome%2Fr6206%22



Contact us now for a free consultation

Contact Us
RCB Advisors
RCB Business Services Pty Ltd

PO Box 439, Camberwell 3124
VICTORIA, Australia

+61 3 9882 0533
vasb@eponqivfbef.pbz.nh

ABN 20 611 163 485. Limited liability by a scheme approved under Professional Standards Legislation. "WHERE VALUE BEGINS” is used under licence from its owner W Value B Pty Ltd, A C N 167 696 997