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  • Section C

    Significant variation in benchmark franking percentage

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

    For corporate tax entities that are not private companies, there are ordinarily 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.

    Was there a significant variation in benchmark franking percentage 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 (unless it is a listed public company that satisfies certain criteria, or is a 100% subsidiary of such a company).

    See also:

    A significant variation occurs where the benchmark franking percentage for the current franking period has increased or decreased by more than 20 percentage points for each franking period. The time frame for determining whether a significant variation has occurred starts immediately after the last franking period in which a frankable distribution was made (the last relevant franking period) and ending at the end of the current franking period.

    • A corporate tax entity may apply for permission to depart from the benchmark rule. The application must be in writing and a departure will only be permitted in extraordinary circumstances that would be unforeseeable and beyond the control of the entity, its members and controllers. The approval of the Commissioner must be obtained before the entity lodges the franking account tax return with the altered franking percentage.
    • For a corporate tax entity that makes a frankable distribution in every franking period, the effect of the above formula is that a significant variation will occur where the benchmark franking percentage increases or decreases between franking periods by more than 20 percentage points.
    • Examples 6 and 7 will help you to work out whether there was a significant variation in your entity’s benchmark franking percentage between franking periods.

    If there was a significant variation, print X in the Yes box at Was there a significant variation in benchmark franking percentage between franking periods? on the Franking account tax return 2021. Complete the rest of section C.

    • For the purposes of recording the benchmark franking percentage at 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.
    • Listed public companies that satisfy the criteria set out in subsection 203-20(1) of the ITAA 1997, and 100% subsidiaries of such companies, do not need to complete section C.

    If there was no significant variation, print X in the No box at Was there a significant variation in benchmark franking percentage between franking periods? on the Franking account tax return 2021. Do not complete the rest of section C.

    Example 6 Corporate tax entity with two franking periods

    XYZ Ltd is an unlisted public company. Its income year started on 1 July 2020 and ended on 30 June 2021. Its franking periods and benchmark franking percentage for 2020–21 were:

    Table 5 - Corporate tax entity, XYZ Ltd, with two franking periods

    Franking period

    Period

    Benchmark franking percentage

    1

    1 July 2020 to
    31 December 2020

    50.455

    2

    1 January 2021
    to 30 June 2021

    100.000

    XYZ Ltd’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 its 2020–21 franking account tax return. Consequently it:

    • prints X in the Yes box at Was there a significant variation in benchmark franking percentage between franking periods?
    • completes the benchmark franking period and percentage boxes.
    End of example

     

    Example 7 Private company

    Dombey Pty Ltd is a private company that has an income year from 1 July 2020 to 30 June 2021. The franking period of a private company is the same as its income year.

    Therefore for the 2020–21 income year, Dombey Pty Ltd’s

    • first franking period was from 1 July 2019 to 30 June 2020 – and during 2019–20 Dombey Pty Ltd’s benchmark franking percentage was 60% and
    • second franking period was 1 July 2020 to 30 June 2021 – and during 2020–21 Dombey Pty Ltd’s benchmark franking percentage was 30%.

    For 2020–21, Dombey Pty Ltd:

    • completes section C in the franking account tax return, because its benchmark franking percentage decreased by more than 20 percentage points in the franking period for 2020–21
    • prints X in the Yes box at Was there a significant variation in benchmark franking percentage between franking periods?
    • completes the benchmark franking period and percentage boxes.
    End of example

    Payment slip

    On the payment slip provided, print your entity’s name, tax file number (TFN) and Australian business number (ABN). In the Amount payable box, write the amount you recorded at section B, E Total tax payable. This is the amount of FDT and OFT that is to be paid. See Lodgment and payment requirements for details on how to pay this amount.

    Declaration and other information

    Signing this tax return

    The law requires that an authorised person signs this tax return. An authorised person for this purpose may be the public officer of the company or an agent duly authorised by the company.

    Where an agent provides this tax return and accompanying information (where applicable), the company must prepare, and give to the agent, a signed declaration stating that:

    • the company authorises the agent to give this tax return and accompanying information (where applicable) to the Commissioner, and
    • the information provided to the agent for preparation of the tax return is true and correct.

    The company must retain such a declaration or a copy of it for a period of five years.

    Penalties for failing to lodge documents on time and general interest charge

    The law imposes a penalty on a corporate tax entity that does not lodge this tax return by the due date. It also imposes a general interest charge on an entity that fails to pay FDT or OFT by the due date.

    The Commissioner has the discretion to remit any penalty in whole or in part. If the entity considers the penalty should be remitted, a statement should be attached to this tax return explaining why remission should be granted.

    The Commissioner also has the discretion to remit any general interest charge in whole or in part.

    A request for the remission of the general interest charge should be made:

    • in writing, and
    • outlining fully the circumstances that led to the delay in payment.

    Send the request by:

    • fax to 1300 139 045
    • mail to:

      Australian Taxation Office
      PO Box 327
      ALBURY  NSW  2640

    Lodgment and payment requirements

    When to lodge

    Generally, the franking account tax return must be lodged, and the FDT liability and OFT liability must be paid, on the last day of the month following the end of the income year.

    Late balancing corporate tax entities that elect to have their FDT liability determined on a 30 June basis must lodge a franking account tax return by 31 July each year. This date is also the date by which the FDT is payable. Note that there are different lodgment obligations in relation to OFT liabilities and disclosure obligations for these entities. For more information, see Late balancing corporate tax entities that elect to have their FDT liability determined on 30 June.

    There are some different lodgment and payment rules that arise for certain refunds received within three months after:

    • the end of the income year (or the period ending 30 June for certain late balancing corporate tax entities)
    • a corporate tax entity ceases to be a franking entity.

    For more information on these different lodgment and payment rules, see A refund of income tax affecting a FDT liability.

    For subsidiary members of a consolidated group, where the head company has not notified us of the group’s formation, each group member may still be obliged to lodge a franking account tax return and pay any franking tax liability. This obligation exists until we receive notification of the group’s formation. If the subsidiary member believes it will not have an obligation to lodge a franking account tax return because it will be a member of a consolidated group for the full income year, it may request a deferral of time to lodge.

    If the company does not subsequently form part of a consolidated group, the company will have to lodge a return and pay any franking tax amount owing. General interest charges may be applied back to the original due date.

    If the company lodges a return and pays its franking tax liability on the due date, and, subsequently, the head company notifies us that the company was a subsidiary member for the full year, the subsidiary member will need to contact us to amend the return to zero and request a refund of any franking tax amount paid for this tax return.

    Where to lodge

    Post your franking account tax return with your payment to:

    Australian Taxation Office
    Locked Bag 1793
    PENRITH  NSW  1793

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    To get your payment reference number, you can go online:

    Alternatively, individuals and businesses can:

    • ask your tax agent
    • email payment@ato.gov.au
    • phone 1800 815 886 between 8.00am and 6.00pm, Monday to Friday.

    If you can't make a payment using BPAY® or credit card there is information on other payment options at How to pay.

    More information

    Go to ato.gov.au for general tax information and to download publications and rulings.

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    Last modified: 27 May 2021QC 64892