Franking credits attached to franked dividends paid to your organisation and attached to an entitlement to a franked distribution are refundable. This is provided you meet certain eligibility criteria and your organisation is any of the following:
- a charity registered with the Australian Charities and Not-for-profits Commission (ACNC) and endorsed by us as exempt from income tax
- an income tax exempt deductible gift recipient (DGR) endorsed in its own right. It's not sufficient if your DGR is only endorsed in relation to a fund, authority or institution that it operates, such as a school building fund
- an income tax exempt DGR listed by name in the tax law
- an income tax exempt relief fund declared by the Treasurer to be a developing country relief fund
- a prescribed income tax exempt entity eligible for a refund under relevant regulations.
Franking credits generally occur for shareholders when certain Australian-resident companies pay income tax on their taxable income and distribute their after-tax profits by franked dividends. These franked dividends have franking credits attached.
Franked dividends can also occur as a result of an entitlement to a franked distribution, such as when the organisation is a beneficiary of a trust.
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.
NZ franked credits cannot be claimed. If the NZ company that paid the dividend has not specified that the franking credit is Australian, you should contact the company 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.
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