For 2016-17, the small business company tax rate has been reduced to 27.5 per cent and the maximum franking credit small businesses can allocate has decreased from 30 per cent to 27.5 per cent.
The reduced maximum franking credit rate applies to companies with an aggregated turnover of less than $10 million.
Small businesses who have issued distributions based on the previous 30 per cent tax rate must inform their shareholders of the correct dividend and franking credit amounts as soon as possible. Sending a letter with the correct amounts or issuing an amended distribution statement is the best way to inform affected shareholders.
Please contact our office if you require any assistance.