Test - Business Taxation

Business taxation changes impact a wide variety of businesses in the 2017-18 budget but only changes to corporate tax rates look to impact the majority of businesses in the short term.

What was announced

  • Commitment to Ten Year Enterprise Tax Plan reiterated
  • Big 5 banks impacted by liability levy to be introduced
  • Multinational Anti-Avoidance Law regime strengthened
  • Black economy to be targeted

Commitment to Ten Year Enterprise Tax Plan reiterated

The Government has reiterated its commitment to reducing the tax rate to 25% for all businesses, regardless of turnover, to fulfil its promise of rolling out the “Ten Year Enterprise Tax Plan” originally announced in last year’s Budget.
Currently a 27.5% tax rate will apply to companies with an aggregated annual turnover of less than $25 million from 1 July 2017 and for companies with an aggregated annual turnover of less than $50 million from 1 July 2018. The tax rate for companies with turnover under $50 million will be reduced to 27% from 1 July 2024, 26% from 1 July 2025 and 25% from 1 July 2026. The Government has indicated that it intends to reintroduce the remaining elements of its Enterprise Tax Plan in the current sitting of Parliament.

Major bank liability levy to be introduced

The main announcement for business taxation was the introduction of a 0.06% levy on Authorised Deposit-taking Institutions (ADIs) with licensed entity liabilities of at least $100 billion from 1 July 2017. In practical terms this is the five largest Australian banks. This amount will be indexed to grow in line with nominal Gross Domestic Product (GDP). The levy is calculated quarterly as 0.015% of an ADI’s licensed entity liabilities. The levy will not apply to deposits of individuals, businesses and other entities protected by the Financial Claims Scheme. The Financial Claims Scheme provides Government protection for depositors up to $250,000 per account holder per ADI. 

Multinational Anti-Avoidance Law regime strengthened

For multinational companies, the Multinational Anti-Avoidance Law (MAAL) regime has been strengthened to counter the use of foreign trusts and partnerships in corporate structures effective from 1 January 2016. Multinationals businesses should consider their worldwide structures to ensure compliance within the regime.

Black economy to be targeted

In plans to target the black economy, the Government has extended the Taxable Payment Reporting System (TPRS) to the courier and cleaning sectors, extending it from the construction industry. Further, a ban on the manufacture, distribution, possession use or sale of sales suppression technology has been implemented which allowed businesses to falsify records and avoid paying tax.