From the 2016–17 income year, the small business company tax rate has been reduced to 27.5%. This lower rate now applies to small businesses with a turnover less than $10 million. The company tax rate will remain at 30% for all other companies.
The maximum franking credit that can be allocated to a frankable distribution paid by a small business has reduced to 27.5% from the 2016–17 income year. This is in line with the small business company tax rate for the income year.
If you are a small business and have already issued your 2016–17 distributions based on the 30% company tax rate, you need to notify your members of the correct dividend and franking credit amounts based on the 27.5% company tax rate. You can do this by sending a letter or email to your members, or a revised distribution statement. You also need to ensure the correct amounts are reflected in your franking account.
If you need assistance, please speak with Edney Ryan Chartered Accountants on (02) 9908 9888.