What happens when a co-operative company makes a partly franked distribution

It is open to a co-operative company to make a distribution to its members that has both a franked and unfranked part (that is, a partly franked distribution). In this instance, a deduction will be allowable only for the unfranked part of the distribution that is funded from the co-operative company's assessable income.

A partly franked distribution is one that does not have the maximum amount of franking credits allocated to it, that is, the franking percentage for the distribution is less than 100%.

Example: Partly franked distribution

GDC, a co-operative company, distributes $70,000 to its members for the 2002-03 income year. GDC chooses to frank only 90% of this distribution. The distribution is wholly funded from GDC's assessable income for the 2002-03 income year. GDC will be entitled to claim a tax deduction for $7,000 (that is, $70,000 x 10%), being the unfranked part of the distribution funded from its assessable income for 2002-03.

End of example
    Last modified: 09 Jul 2014QC 17505