Changes in Imputation Rate for Small Business Entities

In the 2016 financial year, the Government enacted legislation to reduce the corporate tax rate for Small Business Entities to 28.5%. However, for the 2016 financial year, the rate of imputation credits attaching to dividends paid by companies was still set at 30%.

Practically, this meant that where a Small Business Entity’s book profit for the 2016 financial year was equal to its taxable income, and assuming the company had no carry forward retained earnings, the company would not have been able to pay a fully franked dividend for the 2016 financial year.

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