Corporate tax rate for 2018 and subsequent financial years
Financial year | Base Rate Entity (BRE) aggregated turnover threshold | Tax rate for | |
BRE companies | Other companies | ||
2018 | $25 Million | 27.5% | 30% |
2019 – 2024 | $50 Million | 27.5% | 30% |
2025 | $50 Million | 27% | 30% |
2026 | $50 Million | 26% | 30% |
2027 | $50 Million | 25% | 30% |
From 1st July 2017, companies that are “Based Rate Entities” (BRE) will apply 27.5% corporate tax rate. For 2017-18, a company is a based rate entity if it is carrying on a business and has an aggregated turnover of less than 25 million. The company tax rate will remain 30% for other companies that are not BRE.
The definition of BRE may change subject to success of proposed law change. Until then, the current definition stands.
The maximum franking credit that can be allocated to a franked dividend is based on a company’s applicable corporate tax rate for imputation, which is worked out on the assumption that its BRE aggregated turnover for the year equals what it was in the prior year.
That is, for the 2017–18 income year, your corporate tax rate for imputation purposes is 27.5% if either:
- your aggregated turnover in the 2016–17 income year was less than $25 million, and you were carrying on a business, or
- this is the first year you are in business.
Otherwise, your corporate tax rate for imputation purposes is 30%.
Small businesses can claim an immediate deduction for assets they first acquire and start to use, or have installed ready for use, up until 30th June 2018, if each depreciable asset costs less than $20,000. The balance of general small business pool is also immediately deductible if the balance is less than $20,000 at the end of an income year that ends on or after 12th May 2015 and on or before 30th June 2018.
Proposed law has been put forward to extend the concession to 30/06/2019. Until then, the current law stands.
Introduction of Single Touch Payroll (STP) – real time reporting of salary and wages, PAYG withholding and superannuation information to the ATO directly from their payroll software.
This came into effect from 1/7/2018 for employers with 20 or more employees (called substantial employers) counted on 1/4/2018.
STP will be broadened to include all employers from 1/7/2019, including employers with 19 or less employees,
Proposed law to increase additional conditions that must be satisfied to be eligible for the small business CGT concessions in relation to disposal of shares in a company or an interest in a trust (e.g., a unit in a unit trust) on or after 1/7/2017. Under the proposed law, four (4) additional basic conditions that will apply for capital gains relating to share in a company or interest in a trust.
The ATO has released a suite of guidance regarding the tax treatment of cryptocurrencies, with a specific focus on Bitcoin. It should be noted that Bitcoin in not foreign currency for income tax purpose.
New GST withholding obligations to apply from 1st July 2018, where purchasers of new residential premises or new subdivisions may be required to withhold GST from the purchase price and pay the amount directly to the ATO as part of the settlement process. The GST amount to be withheld would depend on whether margin scheme was applied or not. As withholding is part of the settlement process, it is expected that lawyers and conveyancers acting on behalf of the purchasers will administer the payment and notification obligations for their clients. It is important that you check with your conveyancing solicitors to ensure that your withholding obligation, if any, is met.
Disclaimer:
The above notes are general information only. They do not constitute tax or financial advices in any way, nor are they intended to. For further information, please visit www.ato.gov.au or contact us on (07) 37115595.
