Rate change for franking credits – 2016/17

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

If small businesses have issued distributions for the financial year 2016/17 based on the 30% tax rate they should inform their shareholders of the correct dividend and franking credit amounts as soon as possible. They can do this by sending them a letter with the correct amounts or issuing an amended distribution statement.

For more information see Small business franking guidance