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Lower company tax rate

We are concerned when ineligible corporate tax entities claim the concessional tax rate for base rate entities.

Last updated 23 August 2022

Artificial or contrived arrangements implemented to access the lower company tax rate attract our attention.

The lower company tax rate applies to a corporate tax entity that is a base rate entity (BRE). The company tax rate of 30% applies to all other corporate tax entities. For more information, see Changes to company tax rate.

We recognise that the majority of corporate tax entities will apply the correct tax rate. However, situations that attract our attention include:

  • corporate tax entities not eligible to be a BRE claiming the concessional tax rate such as entities that  
    • fail to include the annual turnover of all of their connected entities and affiliates in calculating their aggregated turnover (see, Aggregation)
    • have 80% or greater of their income as base rate entity passive income (see, LCR 2019/5 Base rate entities and base rate entity passive income)  
  • artificial or contrived arrangements to change the company tax rate, such as arrangements where groups  
    • restructure to reduce their aggregated turnover
    • shift the derivation of non-passive income to companies who derive only passive income
    • shift passive income to companies deriving non-passive income.

For more information on compliance and administrative approaches for prior years, see PCG 2018/8 Enterprise Tax Plan: small business company tax rate change: compliance and administrative approaches for the 2015–16, 2016–17 and 2017–18 years.