Australia: New rate for franking credits

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The company tax rate for small business has been reduced to 27.5% for 2016-17 and the maximum franking credit of small business has decreased to 27.5% (previously 30%). This reduced rate applies to companies with an aggregated turnover of less than $10 million.

If a corporate tax entity fully franked a distribution during its 2016-17 income year before the Treasury Laws Amendment (Enterprise Tax Plan) Act 2017 (the amending Act) became law on 19 May 2017, the amount of the franking credit on the distribution statement provided to members may be incorrect. This is because the franked distribution would likely be based on the 30% corporate tax rate, when the entity’s tax rate for that income year may in fact be 27.5% because of the law change.

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