From 1 July 2021 the Corporate Tax Rate for Base Rate Entities is to be reduced from 26% to 25%. The Corporate Tax Rate for all other companies is still 30%. This is the last planned reduction to the Corporate Tax Rate at this time.

A Base Rate Entity is a company that:

1. Has an Aggregated Turnover less than the Aggregated Turnover Threshold (currently $50 million for the 2019 FY+); and
2. 80% or less of their Assessable Income is Base Rate Entity Passive Income.

Where a company is a Base Rate Entity, the extent to which they may frank a Dividend will be reduced to the applicable Tax Rate (ie. where a company is subject to tax at 25% they can only franked to a rate of 25%).

For example: a $7,000 fully franked dividend franked to 30% would attach $3,000 franking credits to the Dividend, while a $7,000 fully franked dividend Franked to 25% would attach $2,333 franking credits to it.