Snippets
Lower tax rates brought forward for SMEs The government will bring forward the progressive reduction in the company tax rate for businesses with an aggregated turnover below $50m. Under current legislation, a tax rate of 25% will apply to such taxpayers (also known as base rate entities) from 2026/27. Legislation will be introduced to bring forward the 25% rate to 2021/22.
The government has indicated that a similar change in timing will apply to the roll out of the 16% small business tax offset (tax discount) for unincorporated businesses. Details of the proposed rate changes are set out in the tables below:
Changes to company tax rate for base rate entities
Income year Current tax rate Proposed tax rate
2018/19 27.5% 27.5%
2019/20 27.5% 27.5%
2020/21 27.5% 26%
2021/22 27.5% 25%
2022/23 27.5% 25%
2023/24 27.5% 25%
2024/25 27.5% 25%
2025/26 26% 25%
2026/27 and later years 25% 25%
Changes to small business income tax offset rate
Income year Current small business income tax offset rate Proposed small business income tax offset rate
2018/19 8% 8%
2019/20 8% 8%
2020/21 8% 13%
2021/22 8% 16%
2022/23 8% 16%
2023/24 8% 16%
2024/25 10% 16%
2025/26 13% 16%
2026/27 and later years 16% 16%
Source: Prime Minister and Treasurer’s joint media release, 11 October 2018.