What Is a Base Rate Entity?

A base rate entity is a company that meets the following criteria:

• Has an annual turnover of less than $50 million for the 2021-22 financial year and onwards.
• Derives no more than 80% of its assessable income from passive sources like dividends, interest, and rent. If your business fits this category, you benefit from a reduced company tax rate of 25% on your taxable income.

Calculating Taxable Income

Taxable income is calculated by deducting allowable business expenses from your total income. Allowable deductions include:

• Salaries and Wages: Payments to employees, including superannuation contributions.
• Rent and Utilities: Costs related to business premises.
• Office Supplies and Equipment: Items necessary for daily operations.
• Marketing and Advertising: Expenses incurred in promoting your business

Lodging Your Tax Return

Small business companies are required to lodge an annual tax return with the Australian Taxation Office (ATO) and pay any tax owed by the due date:

• The standard deadline for lodgment is usually 28 February of the following financial year.
• If your company is registered with a tax agent, you may be eligible for an extended deadline.

Additional Tax Obligations

Small businesses may have other tax obligations separate from company tax, including:

• Goods and Services Tax (GST): A 10% tax on most goods and services sold in Australia. Businesses with a turnover of $75,000 or more must register for GST.
• Fringe Benefits Tax (FBT): Tax on non-cash benefits provided to employees, such as company cars or entertainment expenses.

Seeking Professional Help

Navigating small business tax obligations can feel overwhelming, but you don’t have to do it alone. A qualified tax professional can help ensure your business stays compliant while making the most of the deductions and credits available to you. Are you ready to get your small business tax sorted? Click the "Get Started" button to connect with an IPA Certified Tax Accountant today!