Australia: Changes to company tax rates

There are changes to the company tax rates. The full company tax rate is 30% and the lower company tax rate is 27.5%. 

Company tax rates apply to: 

• companies 

The full company tax rate of 30% applies to all companies not eligible for the lower company tax rate. Eligibility for the lower company tax rate depends on whether you are a: 

• base rate entity from the 2017–18 income year onwards 

• small business entity for the 2015–16 and 2016–17 income years

Base rate entity company tax rate 

From the 2017–18 to 2019–20 income years, companies that are base rate entities must apply the 27.5% company tax rate. 

A base rate entity is a company that both: 

• has an aggregated turnover less than the aggregated turnover threshold– of $50 million for the 2019–20 income year 

• 80% or less of the assessable income is base rate entity passive income – this removes the need to carry on a business 

Base rate entity passive income is: 

• corporate distributions and franking credits 

• royalties and rent 

• interest income 

• gains on qualifying securities 

• a net capital gain 

The lower company tax rate 

• 27.5% applies to base rate entities with aggregated turnover less than $25 million 2017–18 income year 

• less than $50 million for the 2018–19 and 2019–20 income years 

• Rate will then reduce to 26% in the 2020–21 income year and 25% in the 2021–22 income year 

Small business entity company tax rate 

You must be a small business entity to be eligible for the lower company tax rate in the 2015–16 and 2016– 17 income years. 

For the 2016–17 income year, the lower company tax rate is 27.5%. This lower rate applies to small businesses that: 

• have an aggregated turnover less than $10 million 

• are carrying on a business for all or part of the year 

For the 2015–16 income year, the lower company tax rate was 28.5% for small business entities with an aggregated turnover less than $2 million, and carrying on a business for all or part year. 

For the 2017–18 income year onwards, you need to be a base rate entity, rather than a small business entity to be eligible for lower tax rate.

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