The Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016 was introduced in the House of Reps, on Thursday 1.9.2016. It contains the following proposed amendments.
Corporate Tax Rate Reduction – 27.5% for SBE’s and 25% for all in 11 years
The Bill proposes to amend the Income Tax Rates Act 1986 to reduce the corporate tax rate to 27.5% for the 2016-17 income year for corporate tax entities that are small business entities, that is, corporate tax entities that carry on a business and have an aggregated turnover of less than $10 million.
This lower corporate tax rate will progressively be extended to all corporate tax entities by the 2023-24 income year.
The corporate tax rate would then be cut (for all corporate entities) to:
- 27% for the 2024-25 income year;
- 26% for the 2025-26 income year; and
- 25% for the 2026-27 income year and later income years.
Small Business Entity turnover threshold increased to $10m, except for …
The Bill proposes to amend the ITAA 1997 to increase the aggregated turnover threshold for access to small business tax concessions to $10 million, but:
- The aggregated turnover threshold for access to the small business income tax offset will be limited to $5 million.
- The current aggregated turnover threshold of $2 million will be retained for the small business CGT concessions.
Date of effect: The new thresholds would apply from the 2016-17 income year.
The new threshold for the car-parking FBT exemption (in s58GA of the Fringe Benefits Tax Assessment Act 1986) would apply from the FBT year commencing on 1 April 2017.
Tax Discount for Unincorporated Small Businesses
The Bill proposes to amend the ITAA 1997 to increase the small business income tax offset to 16% of net small business income by the 2026-27 income year. In the 2025-26 income year and earlier income years, a lower rate of offset would apply:
- For the 2016-17 to 2023-24 income years, the offset would be 8% of net small business income.
- For the 2024-25 income year, the offset would be 10% of net small business income.
- For the 2025-26 income year, the offset would be 13% of net small business income.
[APH website – Bill Tracker] [APH – Bill] [APH – EM] [LTN 169, 1/9/16]
Bill referred to the Senate Economics Legislation Committee
The Bill was referred to the committee on 15.9.16 for report by 10.10.16.
[APH website – Bills Digest] [LTN 179, 15/9/16]