2018–19 income year

From the 2018–19 income year, a company must be a base rate entity to be eligible for the lower 27.5% company tax rate.

A company is a base rate entity if both of the following apply:

• they have a turnover less than the turnover threshold – which is $50 million for the 2018–19 income year
• 80% or less of their assessable income is base rate entity passive income (such as interest, dividends, rent, royalties and net capital gain).

When working out the rate to use when franking your dividends, you need to assume that your aggregated turnover, assessable income and base rate passive income will be the same as the previous year.

Future years

The company tax rate will reduce – for base rate entities – to 26% in 2020–21 and to 25% from the 2021–22 income year.

For further information or advice, please contact Silver & Young Chartered Accountants on 1300 621 884 or by emailing info@silveryoung.com.au.