Change in company tax rate
The Government has announced that the company income tax rate will be reduced by 1.5% to 28.5% from 1 July 2015.
However, companies which have a taxable income in excess of $5 million will be liable to a 1.5% levy which will be contributed towards the paid parental scheme. This levy will commence on 1 July 2015.
The proposed parental leave levy will not give rise to franking credits.
Company tax planning tip
There may be advantages for some shareholders if a company with sufficient franking credits pays franked dividends before 1 July 2015.
Company director penalties
Company directors need to pay attention to companies’ PAYG and SGC liabilities as there are stricter penalties for directors of companies that fail to make outstanding PAYG and SGC payments.
Loans from private companies – Division 7A
Shareholders of private companies and associates may be assessed on a deemed dividend if the company provides them with loans, payments, loan forgiveness or private use of company assets, unless the requirements of Division 7A are satisfied.
Make sure all Division 7A loans made in the 30 June 2013 tax year have been either repaid or put under a complying Division 7A loan agreement by the lodgement date of the company’s 2013 tax return.
Company loans tax planning tip
To ensure all future Division 7A loans are covered by a qualifying loan agreement, consider entering into a Division 7A complying facility loan agreement that will be able to cover all future loans to shareholders and/or their associates.