Reduction in the corporate tax rate
The most significant difference between the Government’s original proposals and what was finally passed by Parliament was in relation to the reduction in the corporate tax rate.
Although the corporate tax rate will still decrease to 25% (by the 2027 income year, as originally proposed), access to the reduced corporate tax rate will be restricted to corporate entities that carry on business with an aggregated turnover of less than $50 million (from the 2019 income year).
The following table provides a summary of how the progressive reduction in the corporate tax rate will apply.
|Aggregated turnover||Company tax rate|
|2016||< $2 million||28.5%|
|2017||< $10 million||
|2018||< $25 million|
< $50 million
|2027 & later||25%|
As noted above, corporate entities with at least $50 million aggregated turnover or, more importantly, companies that do not carry on business (e.g., passive investment companies and ‘bucket companies’) will continue to have a corporate tax rate of 30%.