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If the trust is a shareholder or holder of a non-share equity interest in a company (including a LIC) or held units in a corporate unit trust or a public trading trust, that entity gives the trust a dividend (also referred to as a distribution) or non-share dividend statement. The statement is likely to include the:
- name of the entity making the distribution
- date on which the distribution was made
- amount of the distribution
- amount of franking credit allocated to the distribution
- franking percentage for the distribution
- amount of any withholding tax deducted from the distribution
- name of the shareholder, and
- if the distribution is unfranked, a statement to that effect, or
- if the distribution is franked, the franked amount and the unfranked amount of the distribution.
If a franked distribution has been received with an associated statement of distribution that does not distinguish between the franked and unfranked portions of the dividend, include the total dividend amount at L Franked amount and include any attached franking credits at M Franking credit.
Show only amounts received directly from Australian companies, corporate limited partnerships, corporate unit trusts and public trading trusts. Show dividends that are part of a distribution from a managed investment fund or other trust or partnership at item 8 Partnerships and trusts. Show dividends received from foreign sources, including dividends from a New Zealand company with Australian franking credits attached, at item 23 Other assessable foreign source income.
Copy details from all statements to worksheet 4, and keep the worksheet with the trust’s tax records.
If the trust was paid a dividend by a LIC and the dividend advice statement shows a LIC capital gain amount, the trust can claim a deduction of 50% of the LIC capital gain amount at item 16 Deductions.
Dividends on which family trust distribution or trustee beneficiary non-disclosure tax has been paid
To the extent that FTDT has been paid on a dividend paid or credited to the trust by a company that has made an interposed entity election, that amount is excluded from the assessable income of the trust under section 271-105 of Schedule 2F to the ITAA 1936. Do not show it at K or L.
You cannot claim a deduction for any losses or outgoings incurred in deriving an amount that is excluded from assessable income under section 271-105 and you cannot claim a credit or tax offset for any franking credit attached to the non-assessable non-exempt portion of the dividend.
Accordingly, do not include any amount at M for a franking credit attached to the whole or part of a dividend that is excluded under section 271-105. For more information about the circumstances in which FTDT is payable, see Family trust distribution tax.
If trustee beneficiary non-disclosure tax has been paid on a dividend that is included in a share of net income which the trust is presently entitled to or which has been distributed to the trust, then the dividend is not included in the assessable income of the trust.
You cannot claim a deduction for any losses or outgoings incurred in deriving these amounts that is excluded from assessable income and you cannot claim a tax offset for any franking credits attributable to the dividend.
For more information on dividends, franking credits and tax offset entitlements, see appendix 1.
Show at K the gross amount of unfranked dividends, and the unfranked amount of partially franked dividends (if the dividend statement shows this amount separately) received before any TFN amounts were withheld.
Even if the TOFA rules apply to the trust, show at K all unfranked dividends that were paid or credited to it by Australian companies – this includes those amounts that were paid or credited in respect of financial arrangements subject to the TOFA rules.
If what you show at K includes an amount which is brought to account under the TOFA rules, also complete item 31 Taxation of financial arrangements (TOFA).
For more information, see Guide to the taxation of financial arrangements (TOFA) rules.
If the trust is a holder, or an associate of a holder, of a share or non-share equity interest in a private company and it received:
- directly or indirectly payments or loans forgiven by the company
- loans or debts forgiven by a trustee, where the company has an unpaid present entitlement to income of the trust, or
- payments from a trustee which are attributable to certain unrealised gains, where the company has an unpaid present entitlement to income of that trust.
Then the amounts of those payments (subject to distributable surplus and in the case of a trust the unpaid present entitlement), loans not repaid or debts forgiven are returned as an unfranked dividend unless they are specifically excluded under the provisions of Division 7A of Part III of the ITAA 1936, or the amount treated as a dividend is franked. Division 7A was amended to enable certain amounts treated as dividends to be franked, for example, a private company can frank an amount treated as a dividend that arises because of a family law obligation in certain circumstances. For the purpose of these rules, a 'loan' has an extended meaning to also include, for example, the provision of financial accommodation and transactions that are in-substance loans.
Dividends paid under a demerger are generally not assessable dividends. Do not include a dividend paid under a demerger at K unless the head entity of the demerger group has advised that it is an assessable dividend.
Show at L the franked amount of franked dividends received before any TFN amounts were withheld.
If you have received a franked distribution with an associated statement of distribution that does not distinguish between the franked and unfranked portions of the dividend, include the total dividend amount at L and include any attached franking credits at M.
Show at M the amount of franking credits received directly from a paying company.
The beneficiaries or trustee may be entitled to a share of the franking credits shown at M. This share will be shown at item 54 on the statement of distribution. The amount of franking credits to which they will be entitled will depend on their individual share of the franked distribution received by the trustee, having regard to the deed and any relevant trustee resolutions.
Do not show:
- franking credits if the trustee did not satisfy the holding period rule and the related payments rule in relation to the dividend, for more information; see appendix 1
- franking credits received indirectly via a partnership or other trust; show your share of franking credit from these franked distributions at D item 8
- franking credits attached to distributions paid by a New Zealand franking company; if the trust received franked distributions from a New Zealand franking company, see item 23 Other assessable foreign source income.
We may check the franking amount shown at K, L and M with our own records to determine accuracy; see Information matching.
TFN amounts withheld from dividends
Show at N the total of TFN amounts withheld from dividends received, less any refund of TFN amounts withheld.
Last modified: 13 Feb 2019QC 35444