Private ruling: Small business entity
Date of advice: 16 November 2017
Published: April 2018
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Are you a small business entity for the purposes of the reduced corporate tax rate? | A1: Yes | Q2: Are you taxed at 27.5% for the 2017 income year? | A2: Yes

Relevant facts and circumstances: Your aggregated turnover for the year ended 30 June 2017 was under $10 million. Your gross assessable income for the year ended 30 June 2017 is comprised of: ● Taxable trust distributions ● Interest income You made a profit for the year ended 30 June 2017. Even if you had not received trust distributions, you would still have made a profit for that year, that is, your interest income exceeded your expenses.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 328-110 | Income Tax Rates Act 1986 Section 23

Reasons for decision: Summary: Section 328-110 of the Income Tax Assessment Act 1997 (ITAA 1997) sets out the meaning of a small business entity. The general rule is based on aggregated turnover worked out as at the beginning of the current income year. Subsection 328-110(1) of the ITAA 1997 states that you are a small business entity for an income year if: (a) You carry on a business in the current year and (b) One or both of the following applies: (i) you carried on a business in the income year (the previous year) before the current year and your aggregated turnover for the previous year was less than $10 million; (ii) Your aggregated turnover for the current year is likely to be less than $10 million. Applying the principles in draft Taxation Ruling TR 2017/D7, it is considered that you carried on a business in the 2017 income year. You are a small business entity within the meaning of section 328-110 of the ITAA 1997 as you carried on a business in the 2017 income year and your aggregated turnover for the 2017 income year was less than $10 million. For the 2017 income year, section 23 of the Income Tax Rates Act 1986 sets the company tax rate for small business entities as 27.5% Therefore the tax rate that applies to you for the 2017 income year is 27.5%.