Show download pdf controls
  • Franked distributions funded by capital raisings

    In the Mid-Year Economic and Fiscal Outlook 2016-17, the Government announced that it would introduce a specific measure to prevent a company from attaching franking credits to distributions to shareholders made outside or additional to the company’s normal dividend cycle, to the extent the distributions are funded directly or indirectly by capital raising activities that result in the issue of new equity interests.

    This measure is intended to address issues raised by the ATO in Taxpayer Alert TA 2015/2: Franked distributions funded by raising capital to release franking credits to shareholders.

    This measure will apply to distributions made after 12:00pm (AEDT) on 19 December 2016.

    Administrative treatment

    Once enacted, the measure will apply retrospectively with effect from 12:00pm (AEDT) on 19 December 2016.

    If you have entered into, or are contemplating entering into, an arrangement of the type outlined in Taxpayer Alert TA 2015/2 or which might be within scope of the announced measure, we encourage you to discuss your situation with us by emailing PGIAdvice@ato.gov.au.

    Legislation and supporting material

    This measure is not yet law and is subject to the normal parliamentary process.

    More information

    • Mid-Year Economic and Fiscal Outlook 2016-17 (see Appendix A, Revenue Measures, pages 112 to 113).
    • For practical guidance on our administrative approach to law change proposals with retrospective effect, please see Administrative treatment of retrospective legislation.
      Last modified: 07 Apr 2017QC 51712