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Navigating the changing SBE corporate tax rate landscape


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.


Author profile

Tom Paltridge CTA
Tom Paltridge, CTA, has over eight years of experience with Grant Thornton as a specialist tax adviser with a strong focus on corporate and international tax issues for listed and large private companies. Tom specialises in providing complex tax advice in areas such as tax consolidations, mergers & acquisitions, due diligence, international expansion, corporate structuring and planning, and tax loss utilisation. Tom partners with a wide range of clients to provide tax-effective solutions for his clients and applies a practical approach to ensure their commercial objectives are achieved. - Current at 22 January 2018
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