As part of the 2016/17 Federal Budget tax measures, the Government has embarked on a program to lower the corporate tax rate to 25% for all companies over a period of 10 years (that is, by 1 July 2026). The corporate tax rate is currently 28.5% for small business entities (with annual aggregated turnover of less than $2 million) and 30% for all other companies.
The company tax rate reduction initiative commences from 1 July 2016 with a reduction for small business companies (with annual aggregated turnover of up to $10 million) to 27.5%.
The annual aggregated threshold will then progressively increase to the point where all companies are taxed at the rate of 27.5% in the 2023/24 financial year.
The progressive increase in the annual aggregated turnover thresholds for companies eligible for the 27.5% tax rate is as follows:
In the 2024/25 income year, the company tax rate will reduce to 27% and will then be further reduced by 1 percentage point each year until it reaches 25% in the 2026/27 income year.
Franking credits will still be calculated with reference to the amount of tax paid by the company paying the dividends.
Proposed date of effect: Progressively from 2016/17.