Tax Industry Insight:

TMT - The Real Impact of Reductions in the Corporate Tax

03 October 2017

Draft legislation was introduced on 19 September 2017, proposing to exclude eligible small corporate tax entities from qualifying for the 27.5% small business company tax rate if 80% or more of their assessable income is passive income. Whilst the reduction in the income tax rate provides an opportunity for these small businesses, especially those in the Technology, Media & Entertainment and Telecommunications (TMT), to save and reinvest in technology, it has also resulted in the potential R&D tax benefit they are entitled to changing from 1 July 2017.

The tax implications of the changes, designed to support innovative, high-growth potential start-ups and other companies in the TMT industry, need to be closely examined so these businesses that the recent tax legislative changes were intended to assist, are emboldened rather than burdened.

The registration date to claim R&D tax incentives for the 2017 financial year has also opened and the deadline for entities with an income period ending 31 December 2016 is 31 October 2017, which is only a few weeks away.