Refunds of franking credits - Tax basics for non-profit organisations

Note: This document forms part of our publication Tax basics for non-profit organisations. To view the full publication, click here.

Franking credits attached to franked dividends received by endorsed income tax exempt entities, deductible gift recipients and developing country relief funds may be refundable, provided the eligibility criteria are met.

Franking credits arise for shareholders when certain resident Australian companies pay income tax on their taxable income and distribute their after-tax profits by way of franked dividends. These franked dividends have franking credits attached. Franked dividends are received either directly as a shareholder or indirectly as a beneficiary of a trust.

Organisations that receive a dividend from a New Zealand company with Australian franking credits attached to it may also be able to obtain a refund of those credits.

To be eligible for a refund of franking credits, an entity must have an ABN, be a resident and satisfy at least one of the following:

• be endorsed by the Tax Office as an income tax exempt charity
• be endorsed by the Tax Office as an income tax exempt fund
• be endorsed by the Tax Office as a DGR in its own right, or
• be specifically named as a DGR in the Income Tax Assessment Act 1997

Public funds declared by the Treasurer to be a developing country relief fund are also eligible for a refund of franking credits.

For more information refer to Refunding franking credits: endorsed income tax exempt entities and deductible gift recipients (NAT 6716). To obtain this publication, see More information.

Last Modified: Monday, 4 June 2007