This worksheet only applies to company tax returns.
As a result of the Treasury Laws Amendment (Enterprise Tax Plan) Act 2017 passing, a small business entity with an aggregated turnover of less than $10 million is taxed at 27.5% in the 2016-17 tax year.
From the 2017-18 income year, the 27.5% corporate tax will apply to a base rate entity.
A corporate tax entity will be a base rate entity if it carries on a business and, for the 2017-18 income year, has an aggregated turnover of less than $25 million.
However, a new act, the Treasury Laws Amendment (Enterprise Tax Plan Base Rate Entities) Act 2018 received royal assent on 31 August 2018. This new act alters the definition of what a base rate entity is from 2017–18 onwards by including a passive income test.
Under the new law, a base rate entity will receive the lower corporate tax rate from the 2017–18 income year, and is defined as having:
- an aggregated turnover less than the relevant threshold
- no more than 80% base rate entity passive income. This income includes:
- dividends other than non-portfolio dividends
- franking credits on such dividends
- non-share dividends
- interest income
- royalties and rent
- gains on qualifying securities
- net capital gains
- income from trusts or partnerships, to the extent it is referable (either directly or indirectly) to an amount that is otherwise base rate entity passive income.
When you select Y in the checkbox for test 1, this screen will appear:
Base rate entity passive income % is calculated by dividing Total base rate entity passive income by Total assessable income.
When you select Y in the checkbox for test 2, this screen will appear:
To qualify as a base rate entity, aggregated turnover must be less than $25 million.
Yes
No
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