The corporate tax rate for companies that are base rate entities will be reduced from the current rate of 27.5% to:
-26% from 1 July 2020
-25% from 1 July 2021
What is a base rate entity?
A company is a base rate entity (and subject to the lower tax rate) if it satisfies the following conditions:
-no more than 80 per cent of the company’s assessable income for the income year is passive income (BREPI); and
-the company’s aggregated turnover for the income year (worked out at the end of the year) is less than $50 million
Maximum franking rates
A company’s maximum franking rate is equal to the income tax rate that would apply to the company in the income year in which the distribution is made (the current year), assuming that the company’s aggregated turnover, BREPI and assessable income for the current year are equal to those of the immediate prior income year.
Summary of Tax Rates / Maximum Franking Rates