Refund of franking credits information
Franking credits attached to franked dividends paid to your organisation, or 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 institution that is eligible for a refund under relevant regulations
- an income tax exempt institution that is eligible for a refund under a Commonwealth law other than the income tax law.
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Eligibility for a refund
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.
Franking credits 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 receiving 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 franking 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.
Endorsed charities that are eligible
To be eligible for a refund of franking credits, an entity must meet all the following requirements:
- satisfy the residency requirement
- be a charity registered with the ACNC and endorsed by us as exempt from income tax.
Deductible gift recipients that are eligible
To be eligible for a refund of franking credits, an income tax exempt DGR must meet all of the following requirements:
- satisfy the residency requirement
- be endorsed by us as a DGR in its own right
- be income tax exempt.
A DGR must be endorsed in its own right. It is 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.
To be eligible for a refund of franking credits, an income tax exempt DGR listed by name must meet all of the following requirements:
- have an Australian business number (ABN)
- satisfy the residency requirement
- be a DGR listed by name in the Income Tax Assessment Act 1997
- be income tax exempt.
Residency requirements
Endorsed charities and DGRs will satisfy the residency requirement if, at all times during the relevant income year, it meets both of the following requirements:
- it has a physical presence in Australia
- to the extent that it has a physical presence in Australia, it incurs its expenditure and pursues its objectives principally in Australia.
Check if your organisation is eligible
Use the Australian Business Register's ABN LookupExternal Link tool or phone us on 1300 130 248 to check if your organisation is:
- a DGR
- endorsed as a charity exempt from income tax.
Developing country relief funds
An entity is eligible for a refund of franking credits if it both:
- is an income tax exempt relief fund declared by the Treasurer to be a developing country relief fund
- has not been prescribed by regulation as an entity ineligible for the concession.