Tax Rate
For the 2021/22 year, the reduced corporate tax rate has been reduced to 25%, down from 26%. Eligibility for the reduced corporate tax rate remains unchanged and applies to base rate entity companies with an aggregated turnover of less than $50m.
Small Business Income Tax Offset
The small business income tax offset for the 2021/22 year has been increased to 16%, up from 13%. The tax offset is a 16% discount of the income tax payable on the business income received from a small business entity (other than a company) with an aggregated turnover of less than $5m, up to a maximum of $1,000 a year.
Expanded access to small business concessions
More businesses may now be eligible for most small business tax concessions.
From 1 July 2021, businesses that are not small businesses because their turnover is $10 million or more but less than $50 million can also access these small business concessions:
- simplified trading stock rules; and
- PAYG instalments concession; and
- a two-year amendment period; and
- excise concession.
Temporary Full Expensing of Assets – Extension to 30 June 2023
The temporary full expensing of depreciating assets measure has been extended by 12 months until 30 June 2023. From 7.30 pm AEDT on 6 October 2020 until 30 June 2023 the temporary full expensing allows:
- Eligible business entities with an aggregated turnover less than $5 billion or corporate tax entities that satisfy the alternative test can immediately expense the cost of eligible new depreciating assets.
- Eligible businesses with an aggregated turnover under $50 million can immediately expense the business portion of the cost of eligible second-hand assets for
- Businesses with an aggregated turnover under $10 million can immediately expense the balance of a small business pool at the end of each income year in the period.
Temporary Loss Carry-Back – Extension to 30 June 2023
The temporary loss carry-back measure has been extended by 12 months until 30 June 2023.
- Eligible corporate tax entities with ‘aggregated turnover’ of up to $5 billion can elect to ‘carry back’ a tax loss incurred in the 2019-20 to 2022-23 income years and offset it against the income of the 2018-19 or later years to generate a refundable tax offset.
- The loss carry-back provision only applies to taxable losses, not capital losses and is limited to the corporate entity’s income tax liabilities in the relevant income year and the company’s franking account balance at the end of the current year.
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Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.