Tax paid basis

Under the former imputation system, the franking account recorded the amount of fully franked dividends that were available for distribution.

Under the simplified imputation system, the franking account records the amount of tax paid by the corporate tax entity, that is, on a tax paid basis.

The change to the tax paid basis for maintaining the franking account is one of the main simplification measures introduced by the simplified imputation system.

Example: Tax paid basis

On July 10 Savcor Pty Ltd has a balance in its franking account of $6,000.

On 21 July Savcor pays a PAYG instalment of $6,000 for which they were liable.

On 15 August Savcor Pty Ltd pays a $7,000 fully franked dividend ($3,000 in franking credit attached).

On 12 October Savcor receives a refund of income tax of $300.

The following entries are made in Savcor's franking account on a tax paid basis.

Savcor Pty Ltd - franking account


Transaction details




Jul 10





Jul 21

PAYG instalment




Aug 15

Franked dividend payment




Oct 12

Refund of income tax





End of example
    Last modified: 09 Jul 2014QC 17505