CHART: How Australia will reduce company tax rate to 25% over a decade

The Coalition government’s plan to bring the corporate tax rate down to 25% from 30% will take ten years.

Smaller and smaller rates will apply to small business over years while at the same time expanding the definition of what is a small business, bring lower tax to more.

This chart shows the progression to 2026-27:

The first to benefit will be small businesses with turnover of less than $10 million. For them the tax rate goes to 27.5%, a further cut from last year’s new small business rate of 28.5%.

The $10 million threshold is a significant increase on the current level of $2 million.

Treasurer Scott Morrison says this will deliver a lower tax rate for 870,000 companies employing 3.4 million workers.

Over ten years the tax rate for all companies will fall to 25%.

“This will make Australian companies more internationally competitive in a tough global market place,” Morrison says.

“This means higher living standards for Australians and an expected permanent increase in the size of the economy of just over 1% in the long term.”

Below are the further benefits, applying from July, for those companies with a turnover of less than $10 million a year. Most of these applied to small businesses turning over $2 million a year previously.

  • Immediate tax deductibility for asset purchases costing less than $20,000.
  • Simplified trading stock rules, giving them the option to avoid end of year stocktake if the value of their stock has changed by less than $5,000.
  • A simplified method of paying PAYG tax instalments calculated by the ATO, which removes the risk of under or over estimating PAYG instalments and the resulting penalties.
  • Other tax concessions currently available to small businesses, such as fringe benefits tax (FBT).
  • A trial of simpler business activity statements (BAS), reducing GST compliance costs.

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