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Edited version of your written advice
Authorisation Number: 1051308946246
Date of advice: 16 November 2017
Ruling
Subject: Small business entity
Question 1
Are you a small business entity for the purposes of the reduced corporate tax rate?
Answer
Yes
Question 2
Are you taxed at 27.5% for the 2017 income year?
Answer
Yes
This ruling applies for the following period:
Year ended 30 June 2017
The scheme commences on:
1 July 2016
Relevant facts and circumstances
Your aggregated turnover for the year ended 30 June 2017 was under $10 million.
Your gross assessable income for the year ended 30 June 2017 is comprised of:
● Taxable trust distributions
● Interest income
You made a profit for the year ended 30 June 2017. Even if you had not received trust distributions, you would still have made a profit for that year, that is, your interest income exceeded your expenses.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 328-110
Income Tax Rates Act 1986 Section 23
Reasons for decision
Section 328-110 of the Income Tax Assessment Act 1997 (ITAA 1997) sets out the meaning of a small business entity.
The general rule is based on aggregated turnover worked out as at the beginning of the current income year.
Subsection 328-110(1) of the ITAA 1997 states that you are a small business entity for an income year if:
(a) You carry on a business in the current year and
(b) One or both of the following applies:
(i) you carried on a business in the income year (the previous year) before the current year and your aggregated turnover for the previous year was less than $10 million;
(ii) Your aggregated turnover for the current year is likely to be less than $10 million.
Applying the principles in draft Taxation Ruling TR 2017/D7, it is considered that you carried on a business in the 2017 income year.
You are a small business entity within the meaning of section 328-110 of the ITAA 1997 as you carried on a business in the 2017 income year and your aggregated turnover for the 2017 income year was less than $10 million.
For the 2017 income year, section 23 of the Income Tax Rates Act 1986 sets the company tax rate for small business entities as 27.5%
Therefore the tax rate that applies to you for the 2017 income year is 27.5%.
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