Business Structure Tax Rates

Company

Companies are taxed at two different rates, depending on what the company does. 

• 30% Tax Rate– If it’s a purely investment company. It doesn’t run a business, a business of trading cryptocurrencies, or a business of mining cryptocurrencies. 30% tax rate is a passive investment, and not an active trading.
• 25% Tax Rate–  is for small business concessions. You need to have most of the company’s income to access this lower 25% tax rate. You can see 25% is almost half of the highest marginal tax rate of an individual.

We are not saying, “Everyone, just set up a company if you’re trading,” but that is something that we might consider if we were to advise you on what structure to use for your investments. 

Trust

A trust doesn’t necessarily not pay tax, but a trust gives its profit to other individuals or companies or other entities in the family group, and they pay the tax on the trust’s behalf. We do have clients who invest through trusts and they have to distribute at the end of each year the profits. The people who receive that pay the tax. 

SMSFs (Self Managed Super Fund)

There are two rates of taxes for SMSFs.

• 15% Tax Rate– is what we call the Accumulation Phase where you’re growing your balance in super throughout your lifetime. Majority of Australians are in the accumulation phase, and they’ll be paying 15% tax on the profit that they make in their SMSF.
• 0% Tax Rate– is for the Pension Phase. When you’re drawing on your super at a certain age or older, and you’ve met the conditions of release for super, then you have the option for your super to be taxed at 0%.