A company is a base rate entity if both of the following apply:
- They have a turnover of less than $25 million and
- 80% or less of their assessable income is passive income (such as interest, dividends, rent, royalties and net capital gain).
Therefore companies will not qualify for the lower 27.5% tax rate if more than 80% of its assessable income is income of a passive nature.
This article appeared in our September 2018 newsletter and was written by Renee Larsen