Reminder of small business tax cuts
The ATO has reminded taxpayers that, from 1 July 2015, a new two-tier company tax system took effect and applies to all companies.
This system sees the whole of a company’s taxable income subject to the following rates:
- 28.5% if the company’s aggregated turnover is below a $2 million threshold (i.e., a small business entity or ‘SBE’); or
- 30% if the company’s aggregated turnover is equal to or above a $2 million threshold.
Importantly, companies don’t need to do anything now – if identified as a small business, the new rate will be automatically applied to their PAYG instalments rate or on their next activity statement.
Editor: Note that a capped 5% tax discount, designed to broadly mirror the small business company tax cut, was also introduced for unincorporated small businesses from the 2016 income year. It will be delivered to individual taxpayers in receipt of small business entity income via the ‘small business income tax offset’.