Did you know that reduced tax rates may be available to eligible entities? These include companies, corporate unit trusts and public trading trusts.
If your company is a ‘base rate entity’, your company tax rate is 25% from the 2021–22 income year onwards.
For your company to be a ‘base rate entity’, it needs to meet the following eligibility criteria:
Your aggregated turnover for the income year is less than the aggregated turnover threshold (which is $50 million from the 2018–19 income year onwards, or $25 million for the 2017–18 income year).
If your company earns passive income, it cannot exceed 80% of the company’s assessable income in that income year. Passive income can include: corporate distributions and their franking credits; royalties and rent; most income from interest; gains on qualifying securities; and a net capital gain.
The full company tax rate of 30% applies to all companies that are not eligible for this lower company tax rate.
The rates are different for previous years and different rules apply.