A franking credit refund will not be available to an eligible organisation on payment of a franked dividend directly from the company or indirectly through a trust, if a transaction related to that payment results in any of the following:
- the organisation obtaining a reduced benefit from the franked dividend (or notional trust amount)
- the organisation, or another entity, providing a benefit or incurring a detriment
- the entity that pays the dividend or trust distribution (or their associate) obtaining an advantage
- failure to pass full, unconditional ownership of property comprising the dividend (or trust distribution) to the organisation at the time of payment.
Franking credit trading rules
Your organisation’s entitlement to a franking credit refund may be affected by the holding period rule and the related payments rule.
Under the holding period rule, your organisation must hold 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 interest and ends on the 45th day (or 90th day for preference shares) after the day on which the shares or interest become 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 at risk for at least 45 days (or 90 days for preference shares) during the secondary qualification period to be eligible for a refund of 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 starting on the 45th day before, and ending on the 45th day after, the day the shares became ex-dividend (or 90 days before and after if the shares are preference shares).
Information on refund of franking credits 1 July 2012 to 30 June 2013 (NAT 6716).