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  • How non-share dividends are taxed

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

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    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 franked or unfranked, or any amount of 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 - for example, redeemable preference shares - are treated as not being dividends for imputation purposes. As a consequence, these dividends cannot be franked. The Guide to the debt and equity tests, available on our website, contains more information.

    Last modified: 05 Mar 2020QC 27610