26 May 2022

Are you eligible for the lower company tax rate?

Did you know that reduced tax rates can be obtained from eligible businesses? This includes companies, corporate unit trusts, and publicly traded trusts.

If your company is a base rate entity, your corporate tax rate is 25% from the 2021-22 salary 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 year 2018–19 income onwards, or $25 million for the 2017–18 income year.)

If your company earns passive income, it can’t exceed 80% of the company’s estimated revenue for that 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 aren’t eligible for this lower company tax rate.

The rates are different from previous years and different rules apply.