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ATO Notes Eligibility Requirements for Lower Company Tax Rate — Orbitax Tax News & Alerts

The Australian Taxation Office has issued a release on eligibility for the lower company tax rate for smaller companies (base rate entities). The lower company tax rate for base rate entities is 25% from the 2021–22 income year, which is down from 26% in the 2020-21 income year and 27.5% in the 2017-18 to 2019-20 income years.

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Are you eligible for the lower company tax rate?

Did you know that reduced tax rates may be available to eligible entities? These include companies, corporate unit trusts and public trading trusts.

If your company is a 'base rate entity', your company tax rate is 25% from the 2021–22 income year onwards.

For your company to be a 'base rate entity', it needs to meet the following eligibility criteria:

  • Your aggregated turnover for the income year is less than the aggregated turnover threshold (which is $50 million from the 2018–19 income year onwards, or $25 million for the 2017–18 income year).
  • If your company earns passive income, it cannot exceed 80% of the company's assessable income in that income year. Passive income can include: corporate distributions and their franking credits; royalties and rent; most income from interest; gains on qualifying securities; and a net capital gain.

The full company tax rate of 30% applies to all companies that are not eligible for this lower company tax rate.

The rates are different for previous years and different rules apply.

Find out about

Changes to company tax rates

See also

Concessions at a glance