Company tax rates are reducing for some businesses – is yours one of them? Tax planning now can help you plan ahead for your tax liability and create effective tax minimisation strategies.
Some companies are eligible for lower tax rates. We’ll always apply the tax law for your benefit when we prepare your company tax return.
Company tax rates apply to companies, corporate unit trusts and public trading trusts considered to be base rate entities.
Base Rate Entities
Base rate entities have an aggregated turnover of less than $50 million and have 80% or less of their assessable income as passive income. This replaces the requirement to carry on a business.
Base rate passive income includes income types such as corporate distributions, royalties, rent, interest income and more.
Base rate entities noticed a tax reduction from 30% down to 27.5% in the 2020 financial year. This rate further reduced to 26% in the 2021 financial year and drops to 25% in the current financial year 2022.
For companies that don’t meet the criteria for being a base rate entity, the full company tax rate of 30% applies.
Is your business eligible for lower rates?
Now is the perfect time to get in touch and talk to us about tax planning. For many businesses, last year's financial performance is unusual, and therefore your expected tax amount may be different than usual.
Planning for the financial year will benefit your business as we can project your tax liability based on your actual financials up to now. You can let us know your questions and aspirations, and together we can consider effective tax and business strategies. We’ll look at payroll, assets, director fees, potential trust distributions, current year performance and your goals for 2022 and beyond.