More companies considered small businesses

The aggregated turnover threshold under which companies classify as a small business, and hence pay tax at a rate of 27.5% (as opposed to 30%), has increased. The threshold in 2018/19 is $50 million, double the 2017/18 threshold. This lower rate does not apply to investment companies.

This means more small companies will be paying the lower tax rate. This will provide opportunities for those businesses to retain greater profits or invest in growth. It also means that, if they distribute franked dividends, the franking rate will be 27.5%, not 30%.

The information contained in this publication is based on the understanding KeyInvest (ABN 74 087 649 474 AFSL No. 240667) has of the relevant Australian legislation as at the date shown in this publication.

The information contained in this publication is of a general nature only and is intended for use by financial advisers and other licensed professionals only. It must not be handed to clients for their keeping nor can any copies of sections of this publication be given to clients. KeyInvest is not a registered tax agent under the Tax Agent Services Act 2009. We recommend that your client be referred to their registered tax agent or legal adviser prior to implementing any recommendations that you may make based on the information contained in this publication.