Significant variations between benchmark franking percentages may indicate the presence of streaming. Because of this, entities must disclose any significant variation in the benchmark franking percentages between successive franking periods.
The benchmark franking percentage for a current franking period varies significantly from its benchmark franking percentage for the last relevant franking period if it varies by an amount greater than the amount worked out under the following formula:
The last relevant franking period is the last franking period in which a frankable distribution was made.
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Example: Disclosure rule
Kirkwood Ltd has a benchmark franking percentage of 50% in the franking period ending 31 December 2002 and a benchmark percentage of 100% in the franking period ending 30 June 2003.
Kirkwood Ltd's benchmark franking percentage has increased by 50% which constitutes a significant variation in benchmark franking percentages (1 X 20%). It is required to disclose the variation in a franking return.
Kirkwood Ltd's benchmark franking percentage for the current franking period has varied significantly. It therefore has a disclosure requirement for the current franking period.
Kirkwood Ltd is required to lodge a franking account tax return by the last day of the month following the end of their income year.
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Example: No disclosure required
JK Pty Ltd had:
- a benchmark franking percentage of 0% in franking period 1
- no benchmark franking percentage in franking period 2 because it did not make any frankable distributions in franking period 2, and
- a benchmark franking percentage of 30% in franking period 3.
JK Pty Ltd's benchmark percentage for franking period 3 has increased by 30 percentage points which is less than 40% (that is, the amount calculated using the formula above - 2 x 20 percentage points).
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