The Australian Taxation Office (ATO) recently published two articles concerning the lower company tax rate for incorporated small and medium businesses and changes to small business tax concessions. The article on the lower company tax rate includes that for base rate entities with turnover less than AUD 50 million per annum, the lower tax rate is 27.5% for the 2018-19 to 2019-20 income years and will be reduced to 26.0% for the 2020-21 income year and to 25.0% from the 2021-22 income year. The article also includes links for additional information to determine if a company is eligible for the changes in tax rates.
The article on changes to business tax concessions includes that the small business entity turnover threshold is AUD 10 million per annum, meaning that more businesses are eligible for small business tax concessions including:
- simplified depreciation rules – including the AUD 20,000 instant asset write-off;
- simplified trading stock rules;
- a simplified method of paying PAYG instalments calculated by the ATO; and
- the option to account for goods and services tax (GST) on a cash basis and pay GST instalments as calculated by the ATO.
The article also notes that the tax discount for unincorporated small businesses is increasing to 16% by 2021–22 and includes links for additional information to determine if a business is eligible for the small business entity concessions.