As part of its 10 Year Enterprise Tax Plan, the Government announced a program to cut the company tax rate to 25% over the next 10 years. This measure will commence from July 1, 2016 when the government will cut the company tax rate to 27.5% for small companies with an annual aggregated turnover of less than $10 million.
According to the budget papers, this will deliver a lower tax rate for around 870,000 companies that employ more than 3.4 million workers.
The turnover threshold will then be progressively increased and ultimately all companies with a turnover of $1 billion or less should have a flat tax rate of 27.5% by the 2023/24 income year. In the 2024/25 income year, the company tax rate will be reduced to 27% and then be reduced progressively by 1 percentage point each year until it reaches 25% in the 2026/27 income year.
These measures introduce the first significant company tax cuts in over a decade, with the last one occurring in 2001 under the Howard Government.
Franking credits will be distributed in line with the rate of tax paid by the company.
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