Are you eligible for the lower company tax rate?

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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.

For more information contact your STS Acountant.

This article was sourced from www.ato.gov.au