Avoid losing valuable franking credits

dVT Group, our fellow members of Walker Wayland Australasia, have considered an opportunity for small businesses to address the potential loss of franking credits that may otherwise remain unuseable following the reduction in the corporate tax rate to 27.5%.

Their solution considers liquidating the company and paying distributions to shareholders in a later year when the company has ceased to trade. As it will no longer be defined as a small business entity, it reverts to the corporate tax rate of 30%. All distributions can then be franked at a maximum rate of 30%, or to the extent of franking credits available.

The opportunity has specific applicability to companies nearing the end of their useful lives.

The full article can be found on their website at dVT Group: Avoid losing valuable franking credits.