Q: A client has several entities. One of them has a turnover of more than $2 million, and another one has a turnover of less than $2 million. When the accountant prepares the tax returns for the smaller entity (less than $2 million), can the accountant use the 28.5% company tax rate, or does she need to consider it as a whole group which has a turnover of more than $2 million?
A: Only companies which are small business entities can use the 28.5% company tax rate. A small business is an entity with an aggregate turnover of less than $2 million. Generally, aggregated turnover is the annual turnover plus the annual turnover of any connected or affiliated business. In this case, the combined turnover of the two businesses is greater than $2 million, so the company tax rate for small companies cannot be used.