Simplified imputation: are you lodging a franking account return unnecessarily?

Franking deficit tax

Under the simplified imputation system (SIS), a number of the imputation related taxes and penalties have been eliminated and rolled into franking deficit tax (FDT).

The SIS also introduced benchmark franking rules. These benchmark rules require all distributions made within a franking period to be franked to the same percentage (the benchmark franking percentage). If a corporate tax entity does not comply with the benchmark rules, they may be liable for either:

  • an over-franking tax (OFT) if the franking percentage for the distribution exceeds the benchmark franking percentage, or
  • a franking debit, if the franking percentage is less than the benchmark franking percentage.

There is also a disclosure rule, which requires a corporate tax entity to inform the Tax Office if it varies its benchmark franking percentage by more than plus or minus 20% between franking periods.

    Last modified: 04 Nov 2015QC 17291