1 July company tax rate reduction.

1 July company tax rate reduction.

Despite the current economic environment, the company tax rate will reduce to 26% for small and medium businesses from 1 July 2020.

The 1 July change is part of a larger progressive plan to reduce the company tax rate to 25% from 1 July 2021 and applies to base rate entities (BRE) – companies, corporate unit trusts, and public trading trusts –  with an aggregated turnover of less than $50 million where 80% or less of the entity’s turnover for the year is classified as base rate entity passive income. Larger companies will continue to pay the 30% rate.

  2018-19 and 2019-20 2020-21 2021-22
Base rate entities* 27.5% 26% 25%
Other corporate tax entities 30% 30% 30%

*aggregated turnover less than $50m and no more than 80% of the company’s assessable income is base rate entity passive income.

The reduction in the company tax rate will also change the maximum franking rate that applies to dividends paid by some base rate entities. The way the rules normally work is that if the company was classified as a base rate entity and was taxed at the lower corporate tax rate in the previous year then a lower maximum franking rate will apply to dividends paid in the current year. For example, a company that was classified as a BRE in the 2019 income year will generally be subject to a maximum franking rate of 27.5% on franked dividends paid in the 2020 income year. However, the maximum franking rate will normally be 26% for dividends paid in the 2021 income year if the company was a BRE in the 2020 income year.

Some companies may have franking account balances that have accumulated over time and will reflect prior company tax rates. It is important to consider how these credits can be utilised in an efficient manner. One strategy could be to bring forward the payment of dividends to utilise the current 27.5% franking rate before the company tax rate reduces to 26% if the cashflow of the company allows for it.

Want to Talk?
If you have any questions or wish to discuss what measures we are taking to support you and your business through this period, please feel free to reach out to your PrimeAdvisory team member, they are looking forward to helping.  To get in touch with the office please call 02 9415 1511 or email reception@primeadvisory.com.au

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What’s changing on 1 July?

What’s changing on 1 July?

  • Company tax rate reduces to 26% for base rate entities
  • $150k instant asset write-off extended until 31st December 2020
  • Cents per km rate for work-related car expenses increase to 72 cents
  • Expected reforms to allow 66 and 67 years olds to make voluntary superannuation contributions without satisfying the work test. This reform is not yet law.
  • Age limit for making superannuation contributions to your spouse increases from 69-74. This reform is not yet law.
  • For those 67 and under, reforms will enable you to use the ‘bring forward rule’ to make up to three years of non-concessional contributions. That is, you can make non-concessional contributions of up to $300,000 from the 2020-21 financial year.

We are here to help, please feel free to give us a call 02 9415 1511 or email reception@primeadvisory.com.au, and we can discuss in further detail.

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End of financial year transaction cut off dates.

End of financial year transaction cut off dates.

With the end of financial year fast approaching, it’s important to plan ahead and ensure your requests are processed before 30 June. 

Key dates:

Macquarie Wrap – 5pm Friday 19th June for all EFT and Bpay contributions. For the full PDF click here.

HUB24 – 5pm Thu 25th June for all EFT and Bpay contributions. For the full PDF click here.

Asgard – 5pm Friday 26th June for all EFT and Bpay contributions. For the full PDF click here.

 

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NSW gives 25% per cent land tax relief to landlords.

NSW gives 25% per cent land tax relief to landlords.

Earlier this month the NSW Government announced additional land tax assistance with both commercial and residential landlords able to receive land tax concessions of up to 25% of their 2020 calendar year land tax liability. This $440 million relief package follows the previous package announces that sets out rental waivers and deferrals for commercial tenancies, for more.

Support package.

A reduction of up to 25 per cent of the land tax payable on a parcel of land in the 2020 land tax year is available when;

  • your land is used for business or residential purposes
  • you’re leasing property on that parcel to a residential tenant – or a business tenant with annual turnover of up to $50 million – who can demonstrate financial distress resulting from the COVID-19 outbreak
  • you reduce the rent of the affected tenant by at least as much as the tax reduction
  • the land tax is directly related to the property for which rent has been reduced.

Financial distress is:

  • for commercial tenants – a 30 per cent drop in revenue due to COVID-19 pandemic
  • for residential tenants – a 25 per cent drop in household income due to COVID-19.

Who’s eligible.

To be eligible for the land tax support package, you must have a land tax liability in 2020.

You must also meet the requirements outlined in the support package, namely:

  • your tenant is suffering from financial distress as a result of COVID-19
  • you have reduced the rent of the affected tenant by at least as much as the tax reduction.

If you’re a landlord who doesn’t have a 2020 land tax liability, refer to the Service NSW website, which provides a number of NSW Government support options you may be eligible for.

If you require more information please click here or get in touch with our team on 02 9415 1511 or email reception@primeadvisory.com.au.

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Restructuring a roaring business.

Restructuring a roaring business.

This month we are honoured to welcome SBA Architects to our ‘OnTrack for Life’ wall. On the 17th of February, SBA Architects celebrated their 17th Anniversary and have a growing team to service their many significant client partnerships such as Goodman, Mirvac, The GPT Group, Stockland, Altus and many more.

SBA Architects are now the go-to industrial architecture experts in Sydney, having designed much of Western Sydney and beyond. They are shaping the city’s industrial infrastructure and challenging themselves as Architects to seize this opportunity to positively contribute to the built environment.

SBA Architects believe one of their ‘unique selling points’ is their team of experienced professionals. SBA Architects Operations Manager Deborah Wild says, “I think I can say that we view Prime as ‘part of that professional team’ who certainly keep us on-track and heading in the right direction, through their keen business acumen and expert account management. With Prime’s guidance, we’ve been able to develop a strategic plan for business development & future growth while enjoying financial stability. Christian’s ‘think outside the box’ approach mirrors our business style, and we have great confidence in the close relationship we’ve forged since Prime became our Advisory service.”

PrimeAdvisory congratulates SBA Architects on their growing success and can’t wait to see what they create next!

Want your photo up there too? Get in touch with your Advisor and share your wins and you could be next! Contact us on 02 9415 1511.

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