Does your company qualify for the reduced tax rate in 2017-2018?

Effective from the 2017–18 income year, some companies are eligible for the lower corporate tax rate of 27.5% if certain conditions are met. Find out if your company qualifies for this reduced rate in the financial year 2017-2018 and more reductions in years to follow.

Reduced company tax rate

2017–18 corporate tax rate

Companies should prepare their 2017–18 income tax returns under the new legislation. To qualify for the lower 27.5% tax rate in the 2017–18 income year, a company must meet the new base rate entity definition which requires them to:

  • have an aggregated turnover of less than $25 million
  • have no more than 80% of their assessable income as base-rate entity passive income

The ATO recommends that if companies have already lodged their 2017–18 company tax returns based on the previous law, they should review their position and lodge an amendment if required.

What if the company doesn’t qualify?

For companies with an aggregated turnover of more than $25 million, and/or with more than 80% of assessable income as passive income, the tax rate for 2017-2018 remains 30%.

What happens in subsequent years?

In the table below, “BRE” stands for “base-rate entity” to mean a company with no more of its assessable income as base-rate entity passive income – in other words, an active business:

FINANCIAL YEAR AGGREGATED TURNOVER THRESHOLD BRE UNDER THRESHOLD BRE OVER THRESHOLD
2018–19 to 2019–20 $50m 27.5% 30.0%
2020–21 $50m 26.0% 30.0%
2021–22 $50m 25.0% 30.0%