The government has passed its Enterprise Tax Plan Bill through the Senate, which will now be voted on in the House of Representatives, which it controls. The next sitting is scheduled for 9th May.

The two main areas that will be affected will be Corporate Tax Rates and the Small Business Entity Concessions

Corporate Tax Rate Reduction

The changes will reduce the company tax rate as well as increase the access to the Small Business CGT Concessions. Originally, the decrease in tax rate was to apply to all companies but has now been limited to entities with less than $50M turnover.

Initially small companies with less than $10M will have their tax rates reduced to 27.5% with larger companies up to $50M turnover following suit by 2018.  In 2024-25, tax rates will reduce a further 1% and again in the following 2 years until rates are 25% across the board.

 

Corporate Tax Rate

Turnover <$10M

Turnover <$25M

Turnover <$50M

2016-17

27.5%

30%

30%

2017-18

27.5%

27.5%

30%

2018-24

27.5%

27.5%

27.5%

2024-25

27%

27%

27%

2025-26

26%

26%

26%

2026-27

25%

25%

25%

 

Companies with turnovers in excess of $50M will continue to be taxed at 30%.

Small Business Entity ("SBE") Concession Threshold Increased

The aggregated turnover threshold for access to the SBE concessions will increase from $2M to $10M for the financial year 2016-17. It should be noted that the Small Business CGT threshold will continue to be $2M.

The SBE concessions provide a number of advantages to small business access to the roll-over for small businesses, immediate deductions for prepayments under 12 months and immediate deductibility for start-up expenses.