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Reduction of the corporate tax rate

On 1 September 2016, the Government introduced Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016 that proposed to reduce the corporate tax rate for corporate entities that are carrying on a business and have an aggregated turnover of less than $25 million for the 2017–18 income year and less than $50 million for the 2018–19 income year – known as base rate entities. This Bill received Royal Assent on 19 May 2017.

Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017 was introduced to the House of Representatives on 11 May 2017. It proposed to progressively reduce the lower corporate tax rate to 25% for all corporate entities by 2026–27. This Bill is not proceeding.

On 18 October 2017, the Government introduced the Treasury Laws Amendment (Enterprise Tax Plan Base Rate Entities) Bill 2017. Under this Bill, only corporate entities who meet the aggregated turnover threshold and have no more than 80% base rate entity passive income are eligible for the lower corporate tax rate. The date of effect is from the 2017–18 income year. This Bill received Royal Assent on 31 August 2018.

On 16 October 2018, the Government introduced Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Bill 2018. This accelerates the future reductions in the corporate tax rate for base rate entities as follows:

  • 27.5 per cent for the 2019–20 income year (as previously legislated)
  • 26 per cent for the 2020–21 income year
25 per cent for the 2021–22 income year and for subsequent income years.
JH Business Services & Taxation
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