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  • Section C Significant variation in benchmark franking percentage

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    Franking period

    Generally, a franking period for a corporate tax entity that is a private company is the same as its income year.

    For corporate tax entities that are not private companies there are generally two franking periods in an income year. The first franking period is the first six months beginning at the start of the entity's income year and the second franking period will be the remainder of the income year.

    Further Information

    For more information on the franking period rules, refer to the fact sheets:

    These are published on our website.

    End of further information

    Was there a significant variation in benchmark franking percentages between franking periods?

    Where a corporate tax entity has a significant variation in its benchmark franking percentage between franking periods it has an obligation to disclose this information to the Commissioner. A significant variation will occur where the benchmark franking percentage for the current franking period has increased or decreased by more than 20 percentage points from the last franking period in which a frankable distribution was made (the 'last relevant franking period').

    Examples 5 and 6 will help you to work out if there was a significant variation in your entity's benchmark franking percentage between franking periods.

    If there was a significant variation, print Y in the box at the right of the question on the tax return and complete the rest of Section C.

    If there was a significant variation, print Y in the box at Was there a significant variation in benchmark franking percentage between franking periods? on the franking account tax return and complete the rest of Section C.

    Attention

    Note:
    For the purposes of recording the Benchmark franking percentage, (labels G to J), the value stated should be worked out to two decimal places, rounding up if the third decimal place is 5 or more.

    If there was no significant variation, print N in the box at Was there a significant variation in benchmark franking percentage between franking periods? You do not have to complete the rest of Section C.

    End of attention

    Example 5
    Corporate tax entity with two franking periods

    XYZ Ltd, a public company, has an income year which started on 1 July 2002 and ended on 30 June 2003. Its franking periods and benchmark franking percentages for the year ended 30 June 2003 were:

    Franking period

    Benchmark franking percentage

    Franking period 1

    1 July 2002 to 31 December 2002

    50.455

    Franking period 2

    1 January 2003 to 30 June 2003

    100.000

    Franking period 1 is the 'last relevant franking period' and franking period 2 is the 'current franking period'.

    The entity's franking percentage for franking period 2 is 100%. This is an increase in the benchmark franking percentage for franking period 1 by an amount that is greater than 20 percentage points, resulting in a significant variation in the benchmark franking percentage. XYZ Ltd has an obligation to disclose this information on the franking account tax return. It would print Y in the box at Was there a significant variation in benchmark franking percentages between franking periods? and complete the Benchmark franking period boxes as follows:

    Benchmark franking period

    Benchmark franking percentages

    Franking period A

    01 .07 .2002 to 31 .12 .2002

    F   50.46

    Franking period B

    01 .01 .2003 to 30 .06 .2003

    G  100.00

    Example 6
    Private company

    ABC Pty Ltd is a private company that has an income year from 1 July 2002 to 30 June 2003. This is also its first franking period because a private company generally has the same franking period as its income year. During the 2002-03 income year ABC Pty Ltd's benchmark franking percentage was 60%.

    The company's second franking period is the next income year-1 July 2003 to 30 June 2004. On its Franking account tax return 2003 ABC Pty Ltd would print N in the box at Was there a significant variation in benchmark franking percentages between franking periods?

    ABC Pty Ltd would not be required to complete the rest of Section C as it has only a single franking period. However, it would have to complete Section C in its 2004 franking account tax return if its benchmark franking percentage increases or decreases by more than 20 percentage points in the franking period for the 2003-04 income year.

    Further Information

    For more information on the benchmark franking percentage, franking periods and the disclosure rule refer to the fact sheets:

    These are published on our website.

    End of further information
    Last modified: 18 Sep 2008QC 16745