5 tax tips for small businesses – Correct company tax rate

A few tips that small businesses should consider when preparing their tax returns are:

1. Check if you are applying the correct company tax rate;
2. Check if you are entitled to the small business income tax offset;
3. Check if you are entitled to a small business CGT concession;
4. Ensure that deductions are only claimed for business (not personal) expenses; and
5. Keeping the right records to support your claims.

 

 

Correct company tax rate

Companies will pay tax at the full rate of 30% or at the lower rate of 27.5% if certain eligibility requirements are met.

The ATO has published a useful table to help companies determine which tax rate is applicable.

 

Income year Aggregated turnover threshold Tax rate for base rate entities* under the threshold Tax rate for all other companies
2017–18 $25m 27.5% 30.0%
2018–19 to 2019–20 $50m 27.5% 30.0%
2020–21 $50m 26.0% 30.0%
2021–22 $50m 25.0% 30.0%

A base rate entity is a company that:

  • has an aggregated turnover less than the aggregated turnover threshold – which is $50 million for the 2018-19 income year; and
  • 80% or less of their assessable income is base rate entity passive income (eg corporate distributions, royalties, rent, interest income).

Tip! Small businesses should make sure whether the 30% rate or 27.5% rate applies to them.

More information on the changes to company tax rates here – https://www.ato.gov.au/

2. small business income tax offset >

Comments are closed.

Post Navigation

Newsletter Archives

business news July 2019 Business newsletter - November 2019 Business Newsletter - September 2019 car expenses motor vehicle expenses single touch payroll small business Small Business - March newsletter Special Budget Edition 2019-20 vehicle expenses