A corporate tax rate of 26% applies to certain small business corporate tax entities with an aggregated turnover of less than 50 million Australian dollars (AUD) for the 2020/21 income year, provided that the company does not derive substantial passive income. The rate for these entities will reduce to 25% from the 2021/22 income year. The corporate tax rate for all other corporate tax entities remains at 30%. See the Taxes on corporate income section.
A number of free trade agreements have taken effect with Australia including Hong Kong on 17 January 2020, Peru on 11 February 2020 and Indonesia on 5 July 2020. See the Other taxes section for more information.
Under the superannuation guarantee (SG) scheme, employers are required to contribute a certain percentage of an employee's earnings base, subject to limited exceptions, to a registered superannuation fund or retirement savings account on behalf of the employee. There is currently an amnesty to provide relief to employers who have identified SG non-compliance issues relating to quarters ended 31 March 2018, provided voluntary disclosures are made to the Australian Taxation Office and any unpaid SG amounts for their employees are paid no later than 7 September 2020. See the Other taxes section for more information.
The Australian government has implemented the Organisation for Economic Co-operation and Development (OECD) hybrid mismatch rules, which generally apply to income years commencing on or after 1 January 2019. See the Group taxation section for more information.
The double tax treaty signed by Australia and Israel on 28 March 2019 has now entered into force and applies for withholding taxes from 1 January 2020. See the Withholding taxes section for more information.
Temporary economic stimulus measures introduced as part of the Federal Government’s economic response to COVID-19 include:
- JobKeeper wage subsidy and cash flow assistance for eligible businesses, as well as not-for-profits (NFPs), to help them stay in business and keep their employees in jobs. See the Tax credits and incentives section for more information.
- Supporting business capital investment through enhanced tax concessions, including for business with aggregated turnover of up to AUD 500 million an immediate tax deduction for the cost of a depreciating asset, whether new or second-hand, which has a cost of less than AUD 150,000 where it was first used or installed ready for use from 12 March 2020 to 31 December 2020, in addition to accelerated depreciation deductions on the purchase of certain new depreciable assets that are acquired and first used or installed ready for use from 12 March 2020 until 30 June 2021. See the Deductions section for more information.
- Measures to support the flow of credit, such as a government guarantee of 50% to support new short-term unsecured loans to small and medium enterprises.
- Temporary relief for financially stressed business, including, among other measures, relief for directors from any personal liability for trading while insolvent.
COVID-19 has presented some specific tax challenges for businesses as they restrict employee movements and come to grips with the implications of an economic downturn. The Australian Taxation Office (ATO) has responded to many of these implications by providing targeted administrative concessions, relief, and guidance. For further detail, visit the ATO’s COVID-19 support page.
Reforms have been made which expand the scope of those entities that are considered to be a “significant global entity” (SGE) and also to introduce the new concept of a Country by Country Reporting Entity (CbCRE) which are subject to additional integrity rules. Under the new rules, which apply to income years commencing on or after 1 July 2019, the concept of an SGE has been expanded to ensure that when working out whether or not the entity is part of an accounting consolidated group with global revenue of at least AUD 1 billion, it is to be assumed that each member of the group were a listed company and also disregarding the ‘investment entity’ exception for preparing consolidated accounts and materiality. See the Group taxation section for more information.