Businesses that have an annual turnover of $10 million or less will have less tax to pay on their 2016-17 income tax return, according to business accountant Chan & Naylor. The Australian Taxation Office has lowered the company tax rate to 27.5% for those businesses with $10 million or less of turnover, who have operated for all or part of the year.
The maximum franking credit they can allocate to a frankable distribution was also lowered to 27.5%. For the 2017-18 financial year however, the threshold will be increased to an annual turnover of $25 million.
According to the ATO, turnover means aggregated annual turnover that you declare, including the annual turnover of any entity which is affiliated or connected with your company in Australia or overseas. If you have a company which operates two or more arms, you are required to include income from all activities when calculating your annual turnover.
If you and your spouse operate separate companies that are connected by a controlling company, which you and your partner own 50% each, your aggregated turnover is the annual turnover of your business and of the controlling company. It’s best to talk to a business accountant in Sydney about how this policy can affect your company.
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