For the 2017 Financial Year, the corporate tax rate for small businesses was reduced from 28.5% to 27.5% and the aggregated turnover threshold to quality as a small business was increased from $2 million to $10 million.
This reduces the income tax that corporate small businesses are required to pay.
However, it also reduces the amount of franking credits that can be attached to dividends that are paid to and claimed by shareholders.
Overall, the benefit is a timing issue by deferring the payment of some tax to a later time period.
The aggregated turnover threshold will increase to $25 million for the 2018 Financial Year and increase to $50 million for the 2019 Financial Year and beyond at this point in time.
The next expected reduction in the corporate tax rate is in the 2025 Financial Year.
Corporate small businesses include companies, corporate unit trusts and public trading trusts. The corporate tax rate remains at 30% for all other companies that are not small business entities.