As widely reported in the media, the debate on the Tax Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017 resumes on 8 May 2018 when the Parliament reconvenes for the Budget sittings. That Bill, which is the cause of much political debate, proposes to progressively extend the lower 27.5% corporate tax rate to all corporate tax entities by the 2024 income year; and further reduce the corporate tax rate in stages so that by the 2027 income year, the corporate tax rate for all entities will be 25%.

The associated bill, the Tax Laws Amendment (Enterprise Tax Plan Base Rate Entities) Bill 2017, that proposes to deny the lower 27.5% corporate tax rate to corporate tax entities with less than $25 million of turnover that derive predominantly (80% or more) passive income has not been debated by the Parliament since 12 February 2018. This Bill, if passed and assented to, will apply from 1 July 2017. That is, for the current income year.

With debate not able to recommence until the May Budget sittings at the earliest, why this Bill has not been debated since 12 February 2018 is unknown (given Labor supports the Bill). With all the noise about extending the lower corporate tax rate to companies with turnover of $50 million or more, what appears to have been lost is that for companies with less than $25 million of turnover, particularly those with passive income, there is uncertainty about what the company tax rate is as 30 June approaches.

To discuss this article, or for any further information please contact:

Neil Brydges
Special Counsel | Accredited specialist in Tax Law
Sladen Legal
M +61 407 821 157 | T +61 3 9611 0176
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia
nbrydges@sladen.com.au

Sam Campbell
Associate / Business Law
Sladen Legal
M +61 423 515 454 | T +61 3 9611 0135
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia
scampbell@sladen.com.au