In a double stimulus to small business, the definition of a small business has also been expanded from one that turns over $2,000,000 per annum to any business that has a turnover of less than $10,000,000.
The company tax rate will remain at 30% for all other companies that are not small business entities.
For the 2015–16 income year, the small business company tax rate was 28.5% for companies with a turnover less than $2 million and 30% for all other companies.
Previous to this, it was 30% for all companies.
For a business turning over 2.5 million and making a making an annual profit of say $125,000, that means that the tax will be $3,125 less than 2 years ago.
I meeting the $10 million threshold, the ATO aggregates the turnover of other entities with similar ownership and control, so care is needed.
If you want to know more about the definition of a ‘small business’ and how the tax cuts will take effect, contact Noel or Amanda on 03 9585 7555 oremail us.