The corporate tax rate for certain small business taxpayers (being those with aggregated turnover of less than 10 million Australian dollars [AUD]) reduced to 27.5% for the 2016/17 income year. The 27.5% rate will be extended from the 2017/18 income year to those small business corporate tax entities with an aggregated turnover of less than AUD 25 million; and from the 2018/19 income year to those with an aggregated turnover of less than AUD 50 million. After the end of the 2023/24 income year, the 27.5% rate for these entities will reduce progressively to 25% by the 2026/27 income year. Under currently enacted law, the corporate tax rate for all other corporate tax entities will remain at 30% (however, there is a proposal to progressively reduce the corporate tax rate for all entities, not just those noted above). See the Taxes on corporate income section.
Access to accelerated depreciation on certain depreciating assets acquired and installed ready for use between 12 May 2015 and 30 June 2017 was extended to apply (with effect from the 2016/17 income year) to those small business entities that have aggregated turnover of up to AUD 10 million (previously AUD 2 million). This concession was further extended by 12 months so as to apply to relevant depreciating assets acquired and installed ready for use by 30 June 2018 (see the Deductions section for more information).
From 1 July 2017, the Australian goods and services tax (GST) will apply to cross-border supplies of digital products and services imported by Australian consumers. From 1 July 2018, GST will be payable on certain supplies of low value goods (valued at AUD 1,000 or less) that are purchased and imported by Australian consumers.
The rate of the research and development (R&D) offset was reduced for income years commencing on or after 1 July 2016. For companies with an annual turnover of less than AUD 20 million, a 43.5% refundable R&D tax credit applies (for prior years, the rate was 45%). Companies with a turnover of at least AUD 20 million, a non-refundable rate of 38.5% (previously 40%) applies (see the Tax credits and incentives section for more information).
The Australian government continues to enact a range of integrity measures that seek to address multinational tax avoidance by ‘significant global entities’ (broadly, those entities that are part of a global group with global revenue of AUD 1 billion or more), including the following new measures:
- A Diverted Profits Tax (DPT) of 40% applicable to those that engage in contrived related-party arrangements to shift their profits offshore to lower tax jurisdictions (applicable from 1 July 2017).
- Significantly increased penalties that can be applied for failing to lodge a tax return (or other tax-related document) on time (applicable to documents required to be lodged on or after 1 July 2017).
- Doubling of penalties that can be applied for making a false or misleading statement (applicable to statements made from 1 July 2017).
See Integrity measures for large multinationals in the Group taxation section for more information.
Changes were made to the foreign resident withholding regime that has applied to foreign residents that dispose of certain taxable Australian property since 1 July 2016. Specifically, the non-final withholding tax (WHT) rate of 10% was increased to 12.5% from 1 July 2017. See Capital gains in the Income determination section for more information.