LOWER TAXES FOR SMALL AND MEDIUM BUSINESS

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Tax Rate Reduction.jpg

Good news for Small & Medium Businesses with lower tax rates coming soon!

A new Bill introduced to the House of Representatives on 16 October 2018 to accelerate tax cuts for small and medium businesses has received Royal Assent.

The Bill sought to implement the Government’s announcement that it would bring forward by five years the implementation of tax cuts for small and medium sized incorporated businesses with annual turnover of less than $50 million per annum. The changes would mean that small and medium businesses will face a corporate tax rate of 25 % from 1 July 2021 rather than 1 July 2026.

The new Bill also brings forward, from 1 July 2026 to 1 July 2021, the 16 % small business income tax offset for unincorporated small businesses (with annual turnover of less than $5 million).

Simply, the changes are:

Corporate tax rate to reduce from 27.5% to:

(Applicable where aggregated turnover threshold is no greater than $50 million): 

  • 26% for the 2020 - 21 income year, then;

  • 25% for the 2021 – 22 and later income years. 

Small business income tax offset rate for unincorporated businesses from 8% to: 

(Applicable where aggregated turnover threshold is no greater than $5 million): 

  • 13% for the 2020-21 income year, then;

  • 16% for the 2021-22 and later income years. 

These changes are supportive for small and medium businesses.  Please contact our office to further discuss.