October 22, 2018
Andrew Lovett


Government tries to fix the glitch in company tax cut. Does it make things worse? Yes!


Recent changes are outlined below:

July 1, 2022

  • Loss carry back for eligible companies extended to cover 2023 income year.
  • Professional firm profits diverted to the professional's spouse or other associates to be reviewed under new Tax Office guidance.
  • Corporate collective investment vehicle legislative regime introduced.
  • Temporary full expensing of depreciating assets extended to include 2023 income year.
  • Depreciable assets of a company joining a tax consolidation group have tax costs setting rules modified for assets depreciated under temporary full expensing rules.

December 9, 2021

  • Reduced Pandemic leave disaster payment of $750 per week made available through to 30 June 2022.

August 5, 2021

  • COVID-19 Disaster Payments are non-assessable non-exempt income in 2021 income year and later. Payments phasing out as vaccination rates increase.

July 1, 2021

  • New Investment Engagement Service launched for businesses planning significant new investments in Australia.
  • Tax Office small business independent review service made permanent for businesses with turnover < $10m, for income tax, GST, exercise, luxury car tax, wine equalisation tax and fuel tax credits. Requested  before amended assessment issued.
  • Small business income tax offset for individuals increased to provide a reduction of 16% for a tax payable up to $1,000.
  • Self-managed superannuation funds can now have six members, increased from four members previously.

July 1, 2021

  • Some COVID -19 state and territory business grants received by small and medium enterprises are non-assessable, non-exempt income for 2021 and 2022 income years.
  • Certain state, territory and local government financial support for individuals and businesses suffering COVID-19 impacts made exempt where businesses have turnover less than $50 million and only in eligible programs.

March 31, 2021

  • JobKeeper payments scheme ended.

October 5, 2020

  • Boosting apprenticeship commencements subsidy (up to 50% of apprentice's wages) is assessable income.

June 4, 2020

  • Homebuilder grant for new home or substantial renovation construction is not subject to income tax.

April 1, 2020

  • COVID-19 cash flow boost payments are not subject to income tax

In December 2017, we published this article and video:


Those publications were in response to a Government Bill to change the way companies could access the lower corporate tax rate.  That bill has now become law and has made the determination of the tax position for a company much more complicated.

With the “bright line” test in this new law, companies may fluctuate from being a lower tax “base rate entity” one year and subject to the full 30% corporate tax rate the next year and then, subsequently revert.  A change would also trigger for the maximum franking for dividends from that company in the following year.

It’s a complete mess!

Having two different tax rates for companies makes things complicated.  Having a phased introduction makes things complicated.  Creating yet another definition for income makes things complicated.  Creating a circumstance where a company’s tax rate changes year on year depending on an additional, artificial definition of income, makes things complicated. Reducing the level of franking available where companies have paid tax previously at a higher rate is very adverse to shareholders.

We have ended up with a very confusing tax system for small companies.

Heightening the effect of these complications, the Government and the Labor Party have now further agreed to bring forward the further tax cuts that were previously scheduled for the years between 2024 and 2027 to lower the “base rate entity” corporate tax rate from 27.5% to 25%.  Bring forward legislation passed the Senate on 18 October.  The new schedule for the lower corporate tax rates is set out in the table below:

Like so many “pro-business” tax changes in the past the tax benefits might be outweighed by the increase in red tape.

19 October 2017

Andrew Lovett

Save tax

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