Source: Taxation In Australia Journal Article
Published Date: 1 Jun 2018
The question of when an entity is carrying on a business remains something of a maze. Prior to 2016, companies operated within a single 30% tax rate environment, which meant that assisting corporate entity clients in forecasting their tax and dividend payments as part of annual tax strategies was a relatively simple task, regardless of their size. However, the landscape for small business entities changed when the government released the Treasury Laws Amendment (Enterprise Tax Plan Base Rate Entities) Bill 2018 exposure draft for consultation. The intended purpose was to see only companies deriving income actively (and not passively) able to access the lower company tax rate of 27.5%. Neither the draft nor associated explanatory memorandum discussed what it means when a company is carrying on a business. This article will provide advisers with a straightforward approach to guiding their clients through the changing small business entity tax landscape.
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