The new Corporate Activity Tax (CAT) is the business tax that goes into effect January 1.
Created by the Legislature and signed by Governor Kate Brown in May 2019, it is a commercial activities tax on business transactions that take place in Oregon.
According to the State of Oregon, commercial activity is defined as “the total amount realized by a company from the transactions and activity in the regular course of their business in Oregon, without deduction for expenses incurred by the business.”
A small number of business receipts are excluded from the calculation of the amount of commercial activity.
Businesses that have less than $750,000 in commercial activity are excluded from all CAT requirements, as are nonprofit organizations, farmers’ co-ops exempt from federal income tax, federal/state/local government entities like school districts and hospitals/long-term care facilities.
Businesses in the $750,000 and above category must register for the CAT and businesses $1 million and above must file.
The revenue from this tax is designed to be a funding source for Oregon pre-K-12 schools, establishing a “Fund for Student Success.” It’s broken into three parts: Early Learning Account (ELA), Student Investment Account (SIA) and Statewide Education Initiatives Account (SEIA), with each receiving a percentage of funds.
The ELA focuses on early education, including Early Head Start, expanding relief nurseries, more slots for Preschool Promise and Oregon Prekindergarten Programs and fully funding Early Intervention Early Childhood Special Education (EI/ECSE). It will receive at least 20 percent of the funds and support parenting engagement and Healthy Families Oregon.
The SIA receives the largest percentage of funds, at least 50 percent, to meet students’ mental or behavioral health needs and increase academic achievement for students.
It works to reduce academic disparities for economically disadvantaged students, from racial or ethnic groups that have historically experience academic disparities, homeless students, students in foster care and students for whom English is not their first language.
The SEIA contains the greatest number of new programs. Nine of the fifteen programs are new and include school safety, youth re-engagement, summer school for Title 1 schools and more.
Existing programs are High School Success (M98); high cost disability fund; nutrition programs and student success plans for African American and American Indian/Alaska Native students; it will receive up to 30 percent of funds.
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