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Edited version of private advice
Authorisation Number: 1051632368658
Date of advice: 19 February 2020
Ruling
Subject: Company tax rate
Question 1
Is the receipt of fringe benefit employee contributions passive income under subsection 23AB(1) of Income Tax Rates Act 1986 (ITRA)?
Answer
No. It is not a type of income listed in subsection 23AB(1) of the ITRA as 'base rate entity passive income'.
Question 2
Is entity A an eligible entity for the purpose of applying a lower corporate tax rate of 27.5% for the 20XX-XX, 20XX-XX and 20XX-XX income years?
Answer
Yes. Entity A meets the requirements set out in section 23AA of the ITRA to be a base rate entity and consequently is eligible to be taxed at 27.5%.
This ruling applies for the following periods
Year ended 30 June 20XX
Year ended 30 June 20XX
Year ending 30 June 20XX
The scheme commenced on
1 July 20XX
Relevant facts
Entity A operates a consulting activity.
The only activity of Entity A centres around its operations which generate income as personal services income which is paid to the Director, X.
Entity A incurs motor vehicle expenses in respect of the generation of this personal services income.
Entity A is reimbursed in respect of the private use of the company's vehicle by the Director, X.
This reimbursement has been treated as 'other' income of Entity A and assessable to the company.
Entity A does not have any other income or carry out any other activity.
Entity A's aggregated turnover each income year is less than $XX million.
Relevant legislative provisions
Income Tax Rates Act 1986 Section 23
Income Tax Rates Act 1986 Section 23AA
Income Tax Rates Act 1986 Section 23AB