For the purposes of the imputation system, debt/ equity rules dealing with non-share equity interests are designed to apply to non-share dividends in the same way that they apply to dividends. A non-share dividend may be franked or unfranked. Any amount of the dividend, whether it be franked or unfranked, or any amount of imputation/ franking credit carried by the dividend should be shown at the appropriate place on the tax return as if it were in respect of a share.
Dividends on non-equity shares
Under the debt/ equity rules, dividends paid on certain shares that are classified as non-equity shares are treated as not being dividends for imputation purposes. In consequence, these dividends cannot be franked. The Guide to the debt and equity tests contains an example of a redeemable preference share which would be a non-equity share.