Draft legislation on lower corporate tax rate eligibility released

/in /by

Treasury has released exposure draft legislation that will generally exclude passive investment companies from accessing the lower corporate tax rate from the 2016/17 income year.

Currently, the corporate tax rate for qualifying small corporate tax entities has been reduced to 27.5% for small business entities with a turnover threshold of $10m in the 2016/17 income year. From the 2017/18 income year, access to this rate will be expanded to apply to “base rate entities” with the turnover threshold increasing progressively to $50m in the 2018/19 income year. Under the Treasury Laws Amendment (Enterprise Tax Plan No 2) Bill 2017 it is proposed that the lower corporate tax rate will be extended to all corporations by the 2023/24 income year.

The exposure draft legislation proposes to amend the Income Tax Rates Act 1986 to ensure that a corporate tax entity will be eligible for the lower corporate tax rate only if it is a base rate entity, ie:

  • the corporate tax entity carries on a business in the income year
  • the aggregated turnover of the corporate tax entity for the income year is less than the aggregated turnover threshold for that income year, and
  • the corporate tax entity does not have passive income for that income year of 80% or more of its assessable income for that income year.

The amendments will commence from 1 July 2016, and apply to the 2016/17 and later income years.

Reference: http://www.iknow.cch.com.au/document/xatagnewsUio2898230sl875561242/draft-legislation-on-lower-corporate-tax-rate-eligibility-released

Crowd-sourced equity funding for proprietary companies Bill introduced

/in /by

Crowd-sourced equity funding is an innovative type of fundraising that allows a large number of individuals to make small financial investments in exchange for an equity stake in the company.

Legislation to create a crowd-sourced equity funding regime for public companies will commence on 29 September 2017. Extending the crowd-sourced equity funding framework to proprietary companies will allow these companies to access an alternative form of finance with additional obligations that will protect investors.

The amendments extend the crowd-sourced equity funding regime to proprietary companies by:

  • expanding the eligibility for the crowd-sourced equity funding regime to proprietary companies that meet eligibility requirements
  • providing that proprietary companies with shareholders who acquire shares through a crowd-sourced equity funding offer are not subject to the takeovers rules
  • adding special investor protection provisions for proprietary companies accessing the crowd-sourced equity funding regime, and
  • removing the temporary corporate governance concessions in the Corporations Amendment (Crowd-sourced Funding) Act 2017 for proprietary companies that convert to or register as public companies to access the crowd-sourced equity funding regime.

The special investor protection provisions that will apply to proprietary companies accessing the crowd-sourced equity funding regime include requirements to:

  • maintain a minimum of two directors
  • prepare annual financial and directors’ reports in accordance with accounting standards
  • have their financial reports audited once they raise $3m or more from crowd-sourced equity funding offers, and
  • comply with the existing related party transaction rules that apply to public companies.

Eligible companies are able to raise A$5 million through CSF.

 

Reference: http://www.iknow.cch.com.au/document/xatagnewsUio2894474sl873925854/crowd-sourced-equity-funding-for-proprietary-companies-bill-introduced