Your organisation may be entitled to a tax refund for:
- franking credits attached to franked dividends paid to your organisation
- franking credits attached to an entitlement to a franked distribution.
Your organisation must meet certain eligibility criteria, and be any of the following:
- a charity endorsed by us as exempt from income tax
- a deductible gift recipient
- a public fund declared by the Treasurer to be a developing country relief fund
- an entity prescribed as an exempt institution eligible for a refund under regulations.
An income tax exempt fund, under repealed item 4.1 of section 50-20 of the Income Tax Assessment Act 1997 that was endorsed on or before 31 December 2013 is treated as an endorsed charity that is exempt from income tax.
Franking credits generally arise for shareholders when certain Australian-resident companies pay income tax on their taxable income. They distribute their after-tax profits by franked dividends. These franked dividends have franking credits attached.
Franked dividends can also arise as an entitlement to a franked distribution, such as where the organisation is a beneficiary of a trust.
In addition, organisations that receive a dividend from a New Zealand (NZ) company with Australian franking credits attached to it will be able to obtain a refund of those Australian franking credits.
You cannot claim NZ franking credits. If the NZ company that paid the dividend has not specified that the franking credit is Australian, you should contact them to work out if it is an Australian or NZ franking credit. In most cases, if it is not specified as Australian, it will be a NZ franking credit.