Refunding imputation credits: Overview

From 1 July 2000, resident individuals and certain entities may be entitled to a refund of imputation credits.

The refund applies where a taxpayer's total imputation credits attached to franked dividends paid on or after 1 July 2000 exceed that taxpayer's basic income tax liability for the income year. The amount refunded reflects the amount of any imputation credits, after applying the imputation credits and any other tax offsets to which the taxpayer is entitled to reduce their basic income tax liability to nil.

Previously, imputation credits could only be used to offset a taxpayer's basic income tax liability. Any excess imputation credits were disregarded and could not be refunded.

Who is eligible for the refund?

Subject to the anti-avoidance rules, the taxpayers eligible for a refund of excess imputation credits are resident:

  • individuals who receive franked dividends, either directly or through a trust or partnership;
  • trustees liable to be assessed under section 99 (but not sections 981 or 99A) of the Income Tax Assessment Act 1936 (ITAA 1936);
  • complying superannuation funds;
  • complying approved deposit funds (ADFs);
  • life insurance companies and registered organisations (in respect of their superannuation business);
  • pooled superannuation trusts (PSTs); and
  • endorsed income tax exempt charities and deductible gift recipients.
    Last modified: 04 Nov 2015QC 16379