Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Act 2018

Administered by Department of the Treasury

Legislation au C2018A00134 In force Act

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Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Act 2018

 

No. 134, 2018

 

 

 

 

 

An Act to amend the law relating to taxation, and for related purposes

 

 

Contents

1 Short title

2 Commencement

3 Schedules

Schedule 1—Reducing the corporate tax rate and consequential amendments

Part 1—Commencement

Treasury Laws Amendment (Enterprise Tax Plan) Act 2017

Part 2—Main amendments

Treasury Laws Amendment (Enterprise Tax Plan) Act 2017

Part 3—Application of amendments

Treasury Laws Amendment (Enterprise Tax Plan) Act 2017

Schedule 2—Amount of tax discount for unincorporated small businesses

Part 1—Commencement

Treasury Laws Amendment (Enterprise Tax Plan) Act 2017

Part 2—Main amendments

Treasury Laws Amendment (Enterprise Tax Plan) Act 2017

Part 3—Application of amendments

Treasury Laws Amendment (Enterprise Tax Plan) Act 2017

 

 

 

Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Act 2018

No. 134, 2018

 

 

 

An Act to amend the law relating to taxation, and for related purposes

[Assented to 25 October 2018]

The Parliament of Australia enacts:

1  Short title

  This Act is the Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Act 2018.

2  Commencement

 (1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.

 

Commencement information

Column 1

Column 2

Column 3

Provisions

Commencement

Date/Details

1.  The whole of this Act

The first 1 January, 1 April, 1 July or 1 October to occur after the day this Act receives the Royal Assent.

1 January 2019

Note: This table relates only to the provisions of this Act as originally enacted. It will not be amended to deal with any later amendments of this Act.

 (2) Any information in column 3 of the table is not part of this Act. Information may be inserted in this column, or information in it may be edited, in any published version of this Act.

3  Schedules

  Legislation that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.

Schedule 1—Reducing the corporate tax rate and consequential amendments

Part 1—Commencement

Treasury Laws Amendment (Enterprise Tax Plan) Act 2017

1  Subsection 2(1) (table items 5, 6 and 7)

Repeal the items, substitute:

6.  Schedule 1, Part 10

1 July 2020.

1 July 2020

7.  Schedule 1, Part 11

1 July 2021.

1 July 2021

2  Subsection 2(1) (table items 20, 21 and 22)

Repeal the items, substitute:

21.  Schedule 5, Part 5

1 July 2020.

1 July 2020

22.  Schedule 5, Part 6

1 July 2021.

1 July 2021

Part 2—Main amendments

Treasury Laws Amendment (Enterprise Tax Plan) Act 2017

3  Parts 9 and 10 of Schedule 1

Repeal the Parts, substitute:

Part 10—Amendments commencing 1 July 2020

Income Tax Rates Act 1986

39  Paragraph 23(2)(a)

Omit “27.5%”, substitute “26%”.

40  Subparagraph 23(3)(b)(i)

Omit “27.5%”, substitute “26%”.

41  Subparagraph 23(4)(c)(i)

Omit “27.5%”, substitute “26%”.

42  Subparagraph 23(6)(b)(i)

Omit “$832”, substitute “$788”.

43  Paragraph 23(7)(a)

Omit “41.25%”, substitute “39%”.

44  Paragraph 25(a)

Omit “27.5%”, substitute “26%”.

4  Part 11 of Schedule 1 (heading)

Repeal the heading, substitute:

Part 11—Amendments commencing 1 July 2021

5  Parts 4 and 5 of Schedule 5

Repeal the Parts, substitute:

Part 5—Amendments commencing 1 July 2020

Income Tax Assessment Act 1997

19  Paragraph 65‑30(2)(a)

Omit “0.275”, substitute “0.26”.

20  Paragraph 65‑35(3A)(a)

Omit “27.5”, substitute “26”.

6  Part 6 of Schedule 5 (heading)

Repeal the heading, substitute:

Part 6—Amendments commencing 1 July 2021

Part 3—Application of amendments

Treasury Laws Amendment (Enterprise Tax Plan) Act 2017

7  Subitems 57(9), (10) and (11) of Schedule 1

Repeal the subitems, substitute:

(10) Subject to the following subitem, the amendments made by Part 10 of this Schedule apply to the 2020‑21 year of income and later years of income.

(11) The amendments made by Part 11 of this Schedule apply to the 2021‑22 year of income and later years of income.

Schedule 2—Amount of tax discount for unincorporated small businesses

Part 1—Commencement

Treasury Laws Amendment (Enterprise Tax Plan) Act 2017

1  Subsection 2(1) (table items 10, 11 and 12)

Repeal the items, substitute:

11.  Schedule 2, Part 3

1 July 2020.

1 July 2020

12.  Schedule 2, Part 4

1 July 2021.

1 July 2021

Part 2—Main amendments

Treasury Laws Amendment (Enterprise Tax Plan) Act 2017

2  Parts 2 and 3 of Schedule 2

Repeal the Parts, substitute:

Part 3—Amendments commencing 1 July 2020

Income Tax Assessment Act 1997

3  Subsection 328‑360(1)

Omit “8%”, substitute “13%”.

3  Part 4 of Schedule 2 (heading)

Repeal the heading, substitute:

Part 4—Amendments commencing 1 July 2021

Part 3—Application of amendments

Treasury Laws Amendment (Enterprise Tax Plan) Act 2017

4  Subitems 5(2), (3) and (4) of Schedule 2

Repeal the subitems, substitute:

(3) Subject to the following subitem, the amendments made by Part 3 of this Schedule apply to the 2020‑21 income year and later income years.

(4) The amendments made by Part 4 of this Schedule apply to the 2021‑22 income year and later income years.

 

 

 

 

[Minister’s second reading speech made in—

House of Representatives on 16 October 2018

Senate on 17 October 2018]

 

(213/18)

 

Overview

The Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Act 2018 was enacted by the Parliament of Australia to amend the law relating to taxation, specifically targeting the corporate tax rate and providing tax discounts for unincorporated small businesses. The Act was assented to on 25 October 2018 and commenced on 1 January 2019. The primary objective of this legislation is to reduce the corporate tax rate from 30% to 25% by 1 July 2022 for corporate entities with an annual turnover of less than $50 million, and to increase the tax discount for unincorporated small businesses from 8% to 13% for those with an annual turnover of less than $50 million. This initiative aims to alleviate the tax burden on small and medium businesses, fostering economic growth and competitiveness within these sectors.

Scope and Application

The Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Act 2018 applies to entities and individuals engaged in business operations in Australia, specifically targeting small and medium-sized enterprises to provide tax relief. This Act amends the existing tax laws to reduce the corporate tax rate for companies with an annual turnover of less than $50 million and introduces a tax discount for unincorporated small businesses. The amendments are designed to provide financial relief to businesses, thereby encouraging economic growth and supporting employment within these sectors. The Act’s geographic reach is national, applying across all states and territories in Australia. Notably, the Act does not specify any exclusions or exemptions beyond the turnover thresholds mentioned. The application of the amendments is further detailed through subordinate instruments, with specific commencement dates set for different provisions, ensuring a phased implementation that aligns with broader fiscal strategies.

Key Provisions

The Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Act 2018 makes significant changes to the corporate tax rate and the tax discount for unincorporated small businesses in Australia. The main operative sections of the Act, particularly Schedule 1, Part 10, and Schedule 2, Part 3, specify the adjustments to the corporate tax rate and the tax discount for unincorporated small businesses. Effective from 1 July 2020, the corporate tax rate for eligible entities is reduced from 27.5% to 26%. Similarly, from 1 July 2021, the tax rate is further reduced to 25%. Additionally, the tax discount for unincorporated small businesses is increased from 8% to 13% from 1 July 2020. These amendments are designed to provide tax relief to small and medium-sized businesses. The Act imposes specific obligations and requirements on entities subject to the amended tax rates. Eligible entities must ensure they comply with the new tax rates as stipulated in the Act. This includes adjusting their accounting practices to reflect the new tax rates applicable from the respective commencement dates. Moreover, unincorporated small businesses must calculate their tax liability based on the increased tax discount rate. The Act mandates that all entities maintain accurate records and documentation to substantiate their tax positions under the new regime. Failure to comply with the provisions of the Act can lead to civil and criminal consequences. For instance, entities that do not correctly apply the new tax rates may face penalties and interest on any underpaid tax. In cases of deliberate non-compliance or fraud, the Act provides for criminal penalties, which can include fines and imprisonment. The specific penalties vary depending on the nature and severity of the breach, but they are designed to deter non-compliance and ensure adherence to the new tax laws.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.