Tax Planning for Company Dividends 2019/20
The 2019/20 tax rate for companies with aggregated turnover of less than $50m and less than 80% of their income in the form of “base rate entity passive income” is 27.5%. For most of these companies, any dividends paid during the year and before 30 June 2020 can be franked to 27.5%.
As the company tax rate for such companies is scheduled to reduce to 26% from 1 July 2020, the franking rate will also reduce to 26%. Therefore, dividends would need to be declared and credited before 30 June 2020 to use the higher franking rate.