• Limits on claiming refunds

    If unclaimed, what happens to your organisation’s franking credits?

    There are no time limits on claiming franking credits. Your organisation can claim a refund of franking credits for a particular financial year in later years – for example, you can still claim a refund of franking credits from the 2015 financial year in 2016. However, you must use the application form for the financial year that you are applying for.

    It is your responsibility to notify us of your eligibility to claim a refund.

    There are time limits for requesting an amendment to an assessment. We cannot amend an assessment if the time limit has passed.

    See also:

    What impact do the franking credit trading rules have on claiming a refund?

    Your organisation’s entitlement to a franking credit refund may be affected by the holding period rule and the related payments rule.

    One of the underlying principles of the imputation system is that the benefits of imputation should only be available to the true economic owners of shares.

    In substance, the owner of shares is the person who is exposed to the risks of loss and opportunities for gain in respect of the shares.

    Franking credit trading schemes allowed those who were not exposed, or had only a small exposure, to the risks and opportunities of share ownership to obtain access to the full value of franking credits.

    Furthermore, such schemes could run over extended periods and typically involve a payment related to the dividend which had the effect of passing its benefit in economic terms to a counter party.

    The holding period rule and a related payments rule, which requires taxpayers to satisfy certain criteria before they qualify for the benefits of franking, serves to ensure that only the true economic owners of the shares (or an interest in shares) have the entitlement to franking credits on those shares.

    In particular, under the holding period rule, your organisation must hold shares (or an interest in shares) at risk for at least 45 days (or 90 days for preference shares) during the primary qualification period to be eligible for a refund of franking credits. If the organisation is under no obligation to make a related payment, this rule only needs to be met once for each purchase of shares.

    The primary qualification period for the holding period rule is the period starting on the day after the day the organisation acquires the shares (or the interest) and ends on the 45th day (or 90th day for preference shares) after the day on which the shares (or the interest) go ex-dividend.

    The related payments rule applies if your organisation has made, or is under an obligation to make, a related payment for a dividend. Under the related payments rule, your organisation must hold shares (or the interest) at risk for at least 45 days (or 90 days for preference shares) during the secondary qualification period to be eligible for franking credits. This rule must be met for all dividends and distributions where a related payment will be made.

    The secondary qualification period means the period beginning on the 45th day before, and ending on the 45th day after, the day the shares (or the interest) became ex-dividend (or 90 days before and after if the shares are preference shares).

    If your organisation has shares in multiple companies paying franked dividends (and/or multiple franked distributions (e.g. from trusts)), is your organisation eligible for a refund for all the franking credits attached to each?

    Yes. It does not matter how many franked dividends your organisation is paid (or how many franked distributions it is entitled to for the relevant income year) it is eligible for a refund on all attached franking credit entitlements for the relevant income year.

    Your organisation only needs to submit one request for a refund for all of the franked dividends paid and entitlements to franked distributions for the relevant income year.

      Last modified: 10 Dec 2015QC 16343