The Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016 was passed by the House of Reps on Mon 27.3.2017 and the Senate late on Friday 31.3.17 before rising to return for the Budget sittings in May. The passage of this Bill was achieved with the agreement of the Xenophon Team. It will have to return to the Lower House for agreement (which will be a formality as they were Government amendment in the Senate).
The Corporate Tax Cut measures, therefore, will be as follows.
- Instead of applying to all businesses, the reduced corporate tax rate of 27.5% will only apply to businesses with an aggregated turnover of less than $50m from the 2018-19 financial year onwards.
- In the 2016-17 financial year, the reduced corporate tax rate of 27.5% will apply for businesses with an aggregated turnover of less than $10m; $25m turnover in 2017-18; and $50m turnover from 2018-19.
- This effectively implements the first 3 years of the Government’s 10-year plan for company tax cuts. As per the trajectory in the Budget, the corporate tax rate will also be further reduced in stages, starting from 1 July 2024, so that it will eventually fall to 25% by the 2026-27 financial year.
Among other things, the Bill contains measures to:
- reduce the corporate tax rate for small businesses with an aggregated turnover of less than $10m to 27.5% for the 2016-17 financial year and progressively extend that lower rate to all corporate tax entities by the 2023-24 financial year; and further reduce the corporate tax rate in stages so that by the 2026-27 financial year, the corporate tax rate for all entities will be 25%;
- increase the small business entity turnover to $10m from 1 July 2016;
- increase the unincorporated small business tax discount from 5% to 10% over a 10-year period; and
- enable small businesses with an aggregated turnover of less than $10m to access most small business tax concessions (except for the CGT concessions under Div 152 of the ITAA 1997), and small businesses with an aggregated turnover of less than $5m to access the small business income tax offset.
[APH website: Bills Digest; First Reading of Bill; EM, Supplementary EM; Related TT Article; LTN 58, 28/3/17; LTN 61, 31/3/17]