Reduced tax rates may be available to eligible entities. Eligible entities include companies, corporate unit trusts and public trading trusts. If your company is a ‘base rate entity’, your company tax rate is 25% for the 2021–22 income year and foreseeable future.

For your company to be considered as a ‘base rate entity’, it needs to meet the following eligibility criteria. Aggregated turnover for the income year is less than the aggregated turnover threshold ($50 million from the 2018–19 income year onwards, or $25 million for the 2017–18 income year).

If your company earns passive income, it cannot exceed 80% of the company’s assessable income in that income year. Passive income includes: corporate distributions and their franking credits; royalties and rent; most income from interest; gains on qualifying securities; and a net capital gain.

The full company tax rate of 30% applies to all companies that are not eligible for this lower company tax rate.

The rates are different for previous years and different rules apply. For more information, or if you have any queries, please get in contact with your advisor.