Simplified imputation - the franking account

When does a franking debit arise?

A franking debit arises when a corporate tax entity:

• receives a refund of income tax
• makes a franked distribution
• under franks a distribution (that is, the corporate tax entity makes a distribution with a franking percentage that is less than the entity's benchmark franking percentage for the franking period)
• ceases to be a franking entity (to eliminate any franking surplus in the franking account)
• makes a linked distribution
• issues tax-exempt bonus shares (instead of making a distribution)
• streams imputation benefits to members most able to benefit from them
• pays a distribution under the rules governing payments and loans to a shareholder (Division 7A of Part III of the Income Tax Assessment Act 1936), or
• buys back a share on-market.