Changing the distribution statement
In certain limited circumstances a corporate tax entity may apply in writing to the Commissioner to allow it to vary the franking credit allocated on a distribution by amending the distribution statement.
Because the distribution statement provides evidence of the amount of franking credit allocated on a distribution it is expected that the Commissioner will only exercise his discretion where the amount of franking credit stated on the distribution statement was not intended.
In exercising his discretion the Commissioner considers the following matters:
- the number of recipients that will receive an amended distribution statement
- whether the last day for lodging the recipients' tax return for the year of income in which the distribution was made has passed
- whether there would be any change in the recipients' withholding tax liability as a result of changing the franking credit on the distribution
- whether amending the distribution statement will result in the entity breaching the benchmark rule or the anti-streaming rules
- whether amending the distribution statement will result in a new benchmark being set for the franking period in which the distribution was made, and
- any other factors considered relevant by the Commissioner.
Example: Changing the amount of franking credits allocated on a distribution
Boyes Pty Ltd has four shareholders. On 31 July 2002 it paid a franked distribution of $350 to each of its shareholders.
The franking credit allocated to each of these distributions was intended to be $150, that is, they were all intended to be fully franked distributions.
Distribution statements were issued to all four shareholders. However, because of a transposition error, one of the shareholders' distribution statement showed that franking credits of only $105 was allocated to the distribution, making the distribution partly franked.
In this situation, Boyes Pty Ltd could apply to the Commissioner to allow it to change the franking credit allocated on this shareholder's distribution by amending its distribution statement. In making this application, Boyes Pty Ltd must include all information relevant to the matters that must be considered by the Commissioner.
End of example
Franking account tax return
The franking account tax return must be completed for all corporate tax entities that have:
- a liability to pay franking deficit tax, and/or
- a liability to pay over-franking tax, and/or
- an obligation to disclose information to the Commissioner of Taxation in relation to any significant variation in its benchmark franking percentages.
If an entity has such a liability or disclosure obligation, it is only required to complete Section A and the labels on the franking account tax return that are relevant to that liability and/or obligation. If there is no such liability or disclosure obligation, lodgement of the franking account tax return is not necessary.
Find out more
For more information on franking deficit tax, over-franking tax and the disclosure obligation you should refer to the series of fact sheets on the imputation system.
End of find out more