ADN 11.1% 1.6¢ andromeda metals limited

The base rate of company tax for 2021 is 26% reducing to 25% in...

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    The base rate of company tax for 2021 is 26% reducing to 25% in 2022 and thereafter. To get the 26% rather then the 30% rate the company can have no more than 80% of its assessable income as “passive income”. Passive income includes net capital gains so if you dispose of a lot of shares in a particular year and have a large capital gain you might find your company pays tax at 30%.
    If a company pays tax it adds to its franking account which allows franked dividends to be paid. If the company rate was 26% and a dividend of $74 was paid by the company this would be grossed up to $100, personal tax would be paid on the $100 at the individuals personal tax rate and a credit would be given for the $26 franking credit.
    Ultimately if you need the profit for personal use the tax paid in the company and the credit in the individuals return simply offset leaving overall tax paid equal to the individuals marginal tax rate (without the 50% discount you would have got if the shares were in the individuals name).
    Overall having the shares and the capital gain in the company is fine if you want to use the funds for business purposes in the company. If however you want to use the proceeds from the sale of the shares for personal purposes (eg house, boat, travel) then you’re better off having the shares in individuals name (and making sure you hold the shares for at least 12 months to get the 50% CGT discount).
 
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1.6¢
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-0.002(11.1%)
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1.8¢ 1.8¢ 1.5¢ $797.4K 49.05M

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7 2397883 1.6¢
 

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1.7¢ 2031381 4
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