ATO – What attracts our audit attention
To help you taxpayers get things right, you should consider the behaviours, characteristics and tax issues t
The small business company tax rate has been reduced from 30% to 28.5% for income years commencing on, or after, 1 July 2015. This lower rate also applies to small businesses that are corporate unit trusts and public trading trusts.
The corporate tax rate will remain at 30% for all other companies that are not small business entities.
The maximum franking credit than can be allocated to a frankable distribution is unchanged at 30%, including small businesses eligible for the 28.5% tax rate. As small business companies now have a higher franking credit cap than their tax rate, care needs to be taken not to over-frank (that is, allocate more franking credits than are in the franking account when paying dividends). Doing so can result in you having to pay a franking deficit tax.