Knowledge Shop Blog

Sept 2018 Tax Round Up - what you need to know about the new 'passive income' test

On the last sitting day and just prior to the leadership spill the Senate passed amendments to the company tax rate and franking rate rules applying from the 2018 income year onwards.

 

Company Tax: The New Era

Treasury Laws Amendment (Enterprise Tax Plan Base Rate Entities) Bill 2018 also introduces a passive income test which is designed to ensure that the lower company tax rate is not available to companies if more than 80% of total assessable income for the year is passive in nature (as defined in the rules). In tandem with the legislation, the ATO released draft guidance on how to apply the passive income test in a range of practical situations.

If any 2018 company tax returns have already been lodged, then it will be necessary to consider whether these changes could impact on the tax rate that applies. This could also impact on the franking rate that applies to dividends already paid by companies in the 2018 income year – again this is an issue that will need to be revisited.

Members can download the full September 2018 Tax Round Up from the member-only website. To see what Knowledge Shop membership offers, call the team on 1800 800 232 or take a tour online.

Join Michael Carruthers (Tax Director, Knowledge Shop) and Lisa Armstrong (MD, Knowledge Shop), for just the juicy bits of change for accountants and advisers:

 

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