BDO welcomes fast-tracking of business tax rate cuts

18 October 2018

Government plans to fast-track its corporate tax cuts for small and medium-sized businesses have been welcomed by leading professional services firm BDO.

BDO’s National Tax Director, Lance Cunningham said the fast-track plans deliver certainty to small and medium businesses.

“A business that makes $500,000 a year can expect to get to keep an extra $12,500 by the time the tax plan is fully implemented,” Lance said.

“Whilst this may not seem a lot, it would certainly be welcome cash for a business to spend on equipment, marketing and payroll expenses.”

What’s new?

The tax rate for companies with a turnover of up to $50 million has already been reduced from 30 per cent to 27.5 per cent and is scheduled to drop to 25 per cent by July 2026. The Government has now proposed legislation to fast-track this to start from July 2021.

Businesses with a turnover below $50 million will face a tax rate of 26% in 2020-21 and just 25% in 2021-22 rather than from 2026-27 as currently legislated.

Similar timing changes will apply to the roll out of the 16% tax discount for unincorporated businesses from 2021-22.

Who will benefit?

Government figures show more 3 million incorporated companies (3,290,000) and more than 2 million unincorporated businesses (2,350,000) would be set to get extra tax money back.

Corporate 18-19 19-20 20-21 21-22 22-23 23-24 24-25 25-26 26-27
Existing 27.5% 27.5% 27.5% 27.5% 27.5% 27.5% 27% 26% 25%
Fast-tracked 27.5% 27.5% 26% 25% 25% 25% 25% 25% 25%
Unincorporated 18-19 19-20 20-21 21-22 22-23 23-24 24-25 25-26 26-27
Existing 8% 8% 8% 8% 8% 8% 10% 13% 16%
Fast-tracked 8% 8% 13% 16% 16% 16% 16% 16% 16%