Company Tax

Company tax is budgeted to raise $89 billion in 2018-19, and $380 billion over the forward estimates. It is our second largest tax.

Company tax represents 18.8% of all Commonwealth revenue in 2018-19, and 4.7% of GDP.

Tax is currently levied at the rate of 27.5% for companies with aggregated turnover under $50 million, and 30% above that. The Government has announced that it will not proceed with its policy of progressively reducing the rate for all companies to 25% by 2026-27, but intends to introduce the 25% rate for companies with turnover below $50 million from 2021-22.

The model allows you to select either:

• A single uniform rate of company tax for all companies, or
• Variable rates for different sized companies;

and to apply those rates either:

• progressively over the forward estimates (as the Government previously proposed to do); or
• immediately (i.e. with effect from 1 July 2018).

The model does not take account of the impacts of changes to company tax rates to income tax collections from individuals, trusts or superannuation funds because of dividend imputation. As a consequence if company tax rates are decreased the budget bottom line will understate the revenue actually collected; if they are increased it will overstate revenue collected. Similarly, the potential reactions of companies to these changes (‘second round effects’) and the consequential economy wide effects are not modeled.

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