For 2021-2022 income year a base rate entity is a company that both:

  • has an aggregated turnover of less than the aggregated turnover threshold
  • 80% or less of their assessable income is base rate entity passive income

The tax rate for base rate entity for 2021-2022 year has been reduced to 25% (for all other companies the rate remains at 30%)

Base rate entity passive income is:

  • corporate distributions and franking credits on these distributions
  • royalties and rent
  • interest income (some exceptions apply)
  • gains on qualifying securities
  • a net capital gain
  • an amount included in the assessable income of a partner in a partnership or a beneficiary of a trust, to the extent it is traceable (either directly or indirectly) to an amount that is otherwise base rate entity passive income.

Further information can be obtained by following the link below.

https://www.ato.gov.au/rates/changes-to-company-tax-rates/