Simplified imputation: franking account tax return

A Franking Account Tax Return must be completed by you or your agent if a corporate entity (including a New Zealand franking company) has one or more of the following:

  • a liability to pay franking deficit tax
  • a liability to pay over-franking tax, and
  • an obligation to disclose information to us about any significant variation in your benchmark franking percentage.

A company is defined as a New Zealand franking company, if at the time; the company is a New Zealand resident and has a New Zealand franking choice in force. For more information see Trans-Tasman Imputation: Overview (NAT 8672).

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You do not need to lodge a return unless you have a requirement as explained above.

Creditable portion of franking deficit tax

The legislation to allow corporate tax entities the entitlement to claim a franking deficit tax (FDT) offset against their income tax liability received Royal Assent on 21 October 2003. The creditable portion of FDT provisions are contained in Taxation Laws Amendment Act (No. 8) 2003 and will retrospectively apply from 1 July 2002.

The new FDT offset rules contain provisions that replace the franking additional tax provisions that operated under the former imputation system.

The new rules operate to reduce the amount of an FDT offset by 30% where the franking deficit for an income year exceeds 10% of the total franking credits that arose during the income year. The amount of the FDT offset (including any such reduction) must be shown at label C - creditable portion of FDT in the Franking account tax return.

Further information on completing label C of the Franking account tax return and explanatory notes 2004 is available in the following fact sheets:

    Last modified: 17 Dec 2015QC 17224