The ATO has updated the information on its website covering changes to the lower company tax rate and how to work out franking credits.
There are 2 company tax rates – the full 30% company tax rate and the lower 27.5% company tax rate.
When lodging a 2017 company tax return:
- small businesses use the lower 27.5% rate;
- companies with turnover of $10 million or more use the 30% rate.
The ATO notes that Bills are currently before Parliament proposing to:
- change the definition of a base rate entity from the 2017-18 income year. Under the proposed law, the carrying on a business test will be replaced with an 80% passive income test;
- gradually extend the lower company tax rate to all companies.
The ATO says companies should use the existing law if they need to frank their 2017-18 distributions or lodge their 2018 company tax return early. If the proposed changes come into effect, the ATO says they may need to amend their company tax return or distribution statements.
[ATO website – Lower Corporate Rate; LTN 238, 12/12/18; Tax Month Dec 2017]