Changes to the lower company tax rate are now law. This means the definition of a base rate entity has changed by replacing the “carrying on a business” requirement with a passive income test. From the 2017-2018 income year, a company will be a base rate entity, and eligible for the 27.5% lower company tax rate, if:
- 80% or less of their assessable income is base rate entity passive income (such as interest, dividends or rent)
- They have an aggregated turnover below the $25Million turnover threshold (this increased to $50Million from 2018-2019)