Welcome changes to company tax rates and small business tax concessions
Business SA and the Australian Chamber of Commerce and Industry (ACCI) have long advocated for company tax reform, primarily to reduce rates across the board to the OECD average of 25%. While the changes passed by the Senate on 31 March were less than we had hoped for, they were still quite substantial and recognised the Chamber advocacy highlighting the value of at least supporting businesses up to $50 million in turnover. There are three key aspects of the tax bill passed by the Senate:
1. The company tax rate changes agreed by the Senate are summarised as follows:
| |
Aggregated Annual Turnover Threshold |
Entities under the Threshold |
Other Corporate Tax Entities |
| 2015-16 |
$2m |
28.50% |
30% |
| 2016-17 |
$10m |
27.50% |
30% |
| 2017-18 |
$25m |
27.50% |
30% |
| 2018-19 |
$50m |
27.50% |
30% |
| 2019/20 to 2023/24 |
$50m |
27.50% |
30% |
| 2024/25 |
$50m |
27% |
30% |
| 2025/26 |
$50m |
26% |
30% |
| 2026/27 |
$50m |
25% |
30% |
The amended tax bill from the Senate is expected to be re-introduced into the House of Representatives in May and should pass with the Government’s majority. For details of how the ATO is treating PAYG instalments based on changes passed by the Senate,
please click here.
2. The Senate also agreed to pass the following changes to small business tax concessions effective for the 2016/17 income year:
Businesses with a turnover less than $10 million will be able to access a range of concessions which are currently restricted to businesses with less than $2 million turnover, including the $20,000 instant asset write-off which reduces back to $1,000 on 1 July 2017. Note access to the small business capital gains tax concessions will remain capped at $2 million turnover.
Note, unlike for PAYG Instalments related to the company tax rate changes, the ATO is legally obliged to wait until the House of Representatives passes the tax bill in May before applying any changes to small business tax concessions.
3. From 1 July 2016, the Senate agreed access to the unincorporated small business tax discount of 8% (for next eight years before rising incrementally to 16%) will be extended to entities with turnover less than $5 million and capped at $1,000 per individual per annum. Please click here for further detail on the implementation of this aspect of the tax bill.
Business SA is interested in any general feedback members have on how any of these changes impact your business or the economy more broadly. Please contact Andrew Mckenna, Senior Policy Adviser, on
[email protected] or 08 8300 0000.
For technical questions related to how your business can benefit from the tax changes, including the $20,000 instant asset write-off which reverts to $1,000 in July, Business SA suggests members seek professional advice from an accountant.