Integrity rules

Integrity rules ensure that the imputation system is not used to benefit members who don't have a sufficient economic interest in the entity, or to prefer some members over others.

Where the imputation system has been manipulated a tax offset will be denied.

The assessable income of an entity that receives the distribution directly will not be grossed-up. An entity that receives the distribution indirectly will be allowed a deduction (or reduction) to ensure its assessable income does not include its share of the franking credit.

There is also a general disclosure rule that requires franking entities to notify us if the entity’s benchmark franking percentage varies significantly between franking periods. This helps us identify cases where anti-streaming rules might apply.

Individuals that are Australian resident members must meet the anti-avoidance rules to receive a refund. An individual who does not make a related payment may also have consideration to the small shareholder exemption which is subject to a $5,000 threshold (see eligibility details in refunding franking credits – individuals).

The integrity rules are addressed by:

• Dividend streaming (anti-streaming rules)
• Franking credit trading
• Share capital account tainting