Passive Investment Income Ato

Coffee and cake pty ltd is the owner of a small cafe.

Passive investment income ato. The ruling takes a broad view of the meaning of carrying on a business which will extend to companies that hold mainly passive assets such as shares or property as long as its activities are carried out with a view to making a profit. When working out the rate to use when franking your distributions you need to assume that your aggregated turnover assessable income and base rate passive income will be the same as the previous year. Because this income is only 3 8 of its assessable income happy feet pty ltd is a base rate entity for the 2019 20 income year and the 27 5 company tax rate applies. The ato has issued a final tax ruling tr 2019 1 which replaces its previous views expressed in tr 2017 d7.

Example 2 base rate entity. Corporate entities which hold passive investments such as rental properties as they could not satisfy the first eligibility requirement of carrying on a business. You must declare investment income on your tax return. This includes interest bonuses dividends rent you receive capital gains on assets sold and income or credits from trust investments.

The interest income is base rate entity passive income.