When does a franking debit arise?

A franking debit arises when a corporate tax entity:

  • receives a refund of income tax
  • makes a franked distribution
  • under franks a distribution (that is, the corporate tax entity makes a distribution with a franking percentage that is less than the entity's benchmark franking percentage for the franking period)
  • ceases to be a franking entity (to eliminate any franking surplus in the franking account)
  • makes a linked distribution
  • issues tax-exempt bonus shares (instead of making a distribution)
  • streams imputation benefits to members most able to benefit from them
  • pays a distribution under the rules governing payments and loans to a shareholder (Division 7A of Part III of the Income Tax Assessment Act 1936), or
  • buys back a share on-market.
    Last modified: 17 Dec 2015QC 16621